Company Number: 13111906

Analysis Date: 2025-07-20 12:06 UTC

Financial Health Assessment for BATLEY & DAVIES LTD
Incorporated: 04 January 2021 | Sector: Business and domestic software development (SIC 62012) | Account Category: Micro

---

1. Financial Health Score: B-

This grade reflects a company showing clear signs of recovery and financial improvement but still facing some vulnerabilities typical of a young micro-entity. The balance sheet has strengthened significantly over the last year, reflecting healthier working capital and net assets, but there remains a need to solidify cash flow and build reserves to ensure sustainable growth.

---

2. Key Vital Signs

Metric	2024	2023	Interpretation
Current Assets	£31,478	£11,621	Strong increase indicating improved liquidity and ability to cover short-term obligations
Current Liabilities	£15,838	£18,639	Reduction in short-term debt signals better management of payables and obligations
Net Current Assets	£15,640	-£7,018	Shift from negative to positive working capital is a very healthy sign—company can now meet short-term debts comfortably
Net Assets (Shareholders’ Funds)	£13,890	-£7,574	Positive turnaround from negative net assets indicates an improvement in overall financial stability and creditor confidence
Share Capital	£2.00	£2.00	Minimal capital investment typical of micro-entities, but retained earnings and reserves are driving net asset growth

Explanation:

• Current Assets include cash and receivables expected within a year. The growth here suggests better cash flow or more efficient collection of receivables.
• Current Liabilities are debts due within a year. Their reduction is a symptom of improved payment terms or reduced short-term borrowing.
• Net Current Assets (working capital) turning positive is akin to a patient whose vital signs have stabilized after a period of distress—this means the company is no longer operating at a liquidity deficit.
• Net Assets turning positive suggests the company is building equity rather than eroding it, an important sign of financial health and resilience.

---

3. Diagnosis

BATLEY & DAVIES LTD has demonstrated significant recovery from a precarious financial position in 2023, moving from a negative working capital and net asset base to a stable and positive footing by January 2024. The company’s liquidity has improved substantially, reducing the risk of short-term cash flow stress—this is like a patient who has responded well to treatment and regained strength.

The micro-entity status means the company is small with limited resources but is managing its finances prudently. The increase in current assets and reduction in liabilities suggest effective cost control and possibly increased sales or successful collection efforts in software development services.

However, the low share capital and relatively modest net asset base indicate that the company remains vulnerable to external shocks or unexpected expenses. The company’s financial health is improving, but it requires ongoing attention to sustain this positive trajectory.

---

4. Recommendations

• Strengthen Cash Flow Management: Continue improving cash inflows by tightening debtor collections and negotiating favorable payment terms with customers and suppliers. Healthy cash flow is the pulse that keeps the business alive.
• Build Financial Reserves: Retain earnings to increase net assets and provide a buffer against future downturns. Consider reinvesting profits or injecting additional capital if possible.
• Monitor and Manage Liabilities: Keep current liabilities under control to avoid liquidity distress. Avoid accumulating short-term debt that could strain working capital.
• Strategic Planning for Growth: Given the business operates in software development, invest in scalable technology and talent to capitalize on market opportunities, ensuring sustainable revenue growth.
• Regular Financial Reviews: Conduct frequent financial health checks to detect any early symptoms of distress and respond promptly, much like routine health check-ups prevent serious illness.
• Governance and Compliance: Ensure timely filing of accounts and confirmation statements to maintain good standing and avoid penalties or reputational damage.

---