Company Number: 13134131

Analysis Date: 2025-07-20 11:32 UTC

Financial Health Assessment for LMS POWER & LIGHTING LTD

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1. Financial Health Score: B

Explanation:
LMS Power & Lighting Ltd demonstrates a generally healthy financial position with improving net assets and working capital, especially in the latest financial year. The company shows strong liquidity and a solid equity base relative to its micro-entity size, reflecting prudent management. However, the relatively small scale and modest capitalisation mean there is limited buffer against unforeseen shocks, which restrains a top grade.

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2. Key Vital Signs

Metric	2025 (£)	2024 (£)	Interpretation
Current Assets	25,325	9,073	Healthy increase in liquid and short-term assets.
Current Liabilities	2,066	8,071	Significant reduction, improving short-term solvency.
Net Current Assets	23,259	1,002	Strong positive working capital indicates liquidity strength.
Net Assets / Shareholders Funds	22,059	2	Equity has increased sharply, signaling business growth and retained earnings.
Share Capital	1	1	Minimal share capital; growth mainly from reserves/profits.
Average Employees	2	2	Stable small team, consistent with micro-entity status.

Interpretation:

• The company’s net current assets rising from £1,002 to £23,259 suggests a much healthier short-term financial position, akin to a patient recovering from symptoms of liquidity strain.
• Net assets have increased over tenfold, indicating accumulated retained earnings or asset revaluation, which strengthens the company’s capital base like a growing muscle supporting overall health.
• Low current liabilities reduce risk of imminent cash flow distress or short-term creditor pressure.
• The stable employee count reflects consistent operational scale without overextension.

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3. Diagnosis

LMS Power & Lighting Ltd exhibits robust financial health for a micro-entity in the electrical installation industry. The company has demonstrated an encouraging upward trajectory in liquidity and net assets over the past year, reflecting effective management of assets and liabilities. The significant increase in net assets from £2 to £22,059 shows the business is likely generating profits or retaining earnings rather than incurring losses.

No signs of financial distress or over-leverage are evident. The company’s cash flow position appears “healthy,” with current assets comfortably exceeding current liabilities by a wide margin. While the share capital is minimal, the equity growth through reserves or retained profits is a positive sign of financial resilience and sustainability.

Given the micro-entity status, the financial statements are unaudited but prepared under the small companies regime, indicating compliance with relevant reporting standards.

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4. Recommendations

• Maintain healthy working capital management: Continue monitoring receivables, payables, and cash balances to preserve liquidity and avoid symptoms of cash flow stress.
• Build share capital or reserves: While current reserves are positive, consider modest capital injections or reinvesting profits to strengthen the equity base further, providing a buffer against market shocks.
• Plan for growth prudently: As the company grows, gradually increasing employee headcount and fixed assets may be necessary. Ensure these investments are funded sustainably to avoid liquidity strain.
• Prepare for scaling compliance: As turnover and size approach thresholds for small or medium company status, prepare for increased accounting and audit requirements to avoid compliance risks.
• Risk management: Establish contingency plans for economic downturns or industry-specific risks, ensuring the company’s financial health remains stable under stress.
• Regular financial reviews: Conduct periodic internal reviews akin to health check-ups to catch any “symptoms” early before they develop into financial ailments.

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