MARS ELECTRICAL LTD

Executive Summary

Mars Electrical Ltd shows moderate solvency with positive net assets but faces liquidity challenges as evidenced by recurring negative working capital and very limited cash reserves. The company remains compliant with filings and has invested in fixed assets, which may support future operations. Further investigation into cash flow management, debt obligations, and profitability is recommended to fully assess financial stability.

MARS ELECTRICAL LTD - Analysis Report

Company Number: 12492437

Analysis Date: 2025-07-29 14:23 UTC

1. Risk Rating: MEDIUM

The financial data reveals persistent net current liabilities and low cash balances, indicating liquidity challenges. However, the company maintains positive net assets and continues operations without overdue filings, suggesting moderate solvency risk but potential short-term cash flow concerns.

2. Key Concerns:

• Negative Working Capital: The company has negative net current assets for multiple years (e.g., -£2,517 at 31.3.25), indicating current liabilities exceed current assets, which could constrain operational liquidity.
• Low Cash Reserves: Cash on hand is minimal (£572 at 31.3.25), raising concerns about the company’s ability to meet immediate obligations.
• Increasing Long-Term Debt: The hire purchase contracts introduced as long-term liabilities (£12,291 at 31.3.25) represent increased financial commitments which may pressure cash flow if not managed prudently.

3. Positive Indicators:

• Positive Net Assets: Despite liquidity issues, net assets are positive (£1,130 at 31.3.25), showing overall solvency.
• No Overdue Filings: Accounts and confirmation statements are up to date, indicating compliance with regulatory requirements.
• Tangible Fixed Asset Growth: Significant investment in plant and machinery (net book value increased to £19,677) may support operational capacity and future revenue generation.
• Stable Share Capital: While minimal (£2), the company’s share capital is consistent, and retained earnings, although modest, are positive.

4. Due Diligence Notes:

• Cash Flow Analysis: Investigate cash flow statements or management accounts to understand how the company manages liquidity given ongoing negative working capital.
• Debt Terms: Review the terms and repayment schedule of hire purchase contracts to assess the impact on future cash requirements.
• Director’s Advances: The company owes the director £3,751 at year-end; examine the nature and terms of this advance for potential related-party risk.
• Profitability Trends: Since the income statement is not filed (exempt), seek information on profitability or loss trends to evaluate operational sustainability.
• Customer Concentration and Debtor Quality: Assess the composition and collectability of trade debtors (£5,550) to gauge revenue reliability.
• Future Capital Requirements: Determine if additional capital injections or financing will be necessary to alleviate liquidity pressures.

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