M C ELECTRICAL CONTRACTING SERVICES LTD

Executive Summary

M C Electrical Contracting Services Ltd, a recently incorporated micro-entity, shows strong initial financial health with positive liquidity and equity. The company is solvent and well-positioned for growth but should focus on cash flow management and operational scaling to maintain financial wellness. Continued vigilance and strategic planning will be key to sustaining this positive trajectory.

M C ELECTRICAL CONTRACTING SERVICES LTD - Analysis Report

Company Number: 14762285

Analysis Date: 2025-07-20 15:10 UTC

Financial Health Assessment for M C ELECTRICAL CONTRACTING SERVICES LTD

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1. Financial Health Score: B

Explanation:
As a newly incorporated micro-entity with its first financial year ended on 31 March 2024, M C Electrical Contracting Services Ltd shows a sound start with positive net current assets and shareholders' funds. The company demonstrates a stable financial base without signs of distress, but limited historical data and scale restrict a higher grade. The “B” grade reflects a generally healthy condition with room for growth and caution as the business scales.

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2. Key Vital Signs

Metric	Amount (£)	Interpretation
Fixed Assets	6,550	Modest investment in long-term assets, typical for a start-up in electrical contracting.
Current Assets	40,986	Healthy level of liquid resources and receivables to cover short-term obligations.
Current Liabilities	23,615	Short-term debts are moderate; manageable given current assets.
Net Current Assets	17,371	Positive working capital indicates good liquidity, able to meet short-term obligations.
Total Assets less Current Liabilities	23,921	Positive net assets suggest solvency and initial retained earnings.
Shareholders Funds	23,921	Equity backing the company is positive, indicating owner investment and retained profits.
Average Number of Employees	2	Small team size consistent with micro entity, allowing tight cost control but limited capacity.

Interpretation of Vital Signs:
The company has a "healthy cash flow" appearance with sufficient current assets to cover liabilities, signifying no immediate liquidity stress. Positive shareholders’ funds reflect a stable equity base, and the absence of long-term liabilities keeps financial risk low.

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3. Diagnosis

The financial "symptoms" show a business in early growth with sound liquidity and capitalization. Being a micro-entity, the company benefits from simplified reporting but should be mindful of scaling operational and financial controls as it grows.

• Liquidity: The positive net current assets indicate the company can comfortably pay its short-term debts, a key sign of financial health.
• Solvency: Total assets exceeding liabilities show the company is solvent, with equity supporting the asset base.
• Operational Scale: With only two employees on average, the company is likely maintaining tight operational control but may face capacity constraints if demand surges.
• Growth Potential: The current asset structure and equity position provide a platform for expansion, though fresh capital or financing may be required as the business matures.

There are no signs of financial distress such as negative working capital, excessive liabilities, or equity erosion. However, as a new company, it lacks a track record, so ongoing monitoring will be important.

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4. Recommendations

To improve and sustain financial wellness, the company should:

• Maintain Healthy Cash Flow: Continue monitoring receivables and payables closely to avoid cash shortages, especially as contracts grow.
• Build Reserves: Aim to retain earnings to strengthen shareholders’ funds and provide a buffer against unforeseen expenses.
• Plan for Growth: Develop a financial plan anticipating potential investment in staff, equipment, and working capital to meet anticipated demand.
• Implement Financial Controls: As the company expands, introduce robust accounting and budgeting controls to track performance and manage costs.
• Engage Professional Advice: Periodically consult with financial experts to optimize tax planning, funding strategies, and risk management.
• Monitor Compliance: Ensure timely filing of accounts and confirmation statements to avoid penalties and maintain good standing.

By proactively managing these aspects, the company can transition from a healthy start-up to a sustainable and growing enterprise.

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