LOCAL REPAIR SERVICES LTD

Executive Summary

LOCAL REPAIR SERVICES LTD is currently exhibiting signs of financial distress, characterized by negative working capital and net assets over three years. Immediate action to improve liquidity and capital structure is essential to avoid insolvency risks. With targeted interventions in cash flow management and potential capital support, the company can stabilize and work towards sustainable growth.

LOCAL REPAIR SERVICES LTD - Analysis Report

Company Number: 14121521

Analysis Date: 2025-07-29 20:18 UTC

Financial Health Assessment Report: LOCAL REPAIR SERVICES LTD

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1. Financial Health Score: D

Explanation:
The company exhibits persistent negative net current assets and negative shareholders’ funds over the last three reported years, indicating financial strain. While the company remains active and compliant with filing deadlines, the balance sheet shows a fragile liquidity position and a deficit in net assets, which are symptoms of financial distress. The score reflects a weak financial condition with urgent need for corrective measures to restore health.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	130	Very low level of liquid assets, indicating limited cash or receivables to cover short-term debts.
Current Liabilities	2,412	Significant short-term obligations, much higher than current assets.
Net Current Assets (Working Capital)	-2,282	Negative working capital signals difficulty in meeting short-term liabilities—symptom of cash flow strain.
Net Assets (Shareholders’ Funds)	-2,282	Negative net worth means liabilities exceed assets, a worrying sign of insolvency risk.
Employee Count	2	Small workforce consistent with micro entity status, but limited capacity for scaling quickly.
Account Category	Micro	Simplified reporting, but limited financial depth available for detailed analysis.

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3. Diagnosis

Underlying Financial Condition:
LOCAL REPAIR SERVICES LTD is currently in a precarious financial position. The persistent negative net current assets and shareholders’ funds over three years suggest chronic undercapitalisation and cash flow difficulties. The company’s current assets (£130) are insufficient to cover short-term liabilities (£2,412), akin to a patient with a dangerously low heartbeat trying to sustain vital functions. This "symptom" indicates a liquidity crisis that could impair day-to-day operations or ability to pay creditors on time.

Given that the company was incorporated in 2022 and is still showing a negative net asset position by March 2024, it suggests that either initial capital injection was insufficient or the business has been operating at a loss. The lack of fixed assets or substantial current assets suggests minimal investment in long-term resources or inventory.

The director, who holds 75-100% control and is also the principal operator (carpenter by occupation), indicates a closely held family or owner-managed business. This may limit access to external funding or credit lines that could alleviate financial pressure.

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4. Prognosis

The current financial indicators point toward a fragile outlook unless corrective action is taken. Without improvement in liquidity and capital structure, the company risks insolvency or may face difficulties securing trade credit or new business. However, as a micro entity with a small team, there remains potential for turnaround if operational efficiencies are improved, and additional capital is injected.

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5. Recommendations

• Immediate Cash Flow Management:
  Implement strict cash flow controls to reduce short-term liabilities or negotiate extended payment terms with suppliers to ease liquidity pressure.

• Capital Injection:
  Consider an equity injection or director loan to improve net assets and working capital. This will provide the necessary "nutritional support" to revive business health.

• Cost Control:
  Review operational expenses and overheads to ensure the business is not burning cash unnecessarily.

• Revenue Growth Strategies:
  Explore avenues to increase sales or diversify services within the construction and carpentry sectors to improve income streams.

• Financial Monitoring:
  Introduce monthly financial reviews focusing on key metrics such as cash flow, receivables, and payables to catch early signs of distress.

• Professional Advice:
  Engage with financial advisors or accountants to develop a formal turnaround plan and explore funding options.

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