MATTHEW WEBSTER AUTOS LTD

Executive Summary

Matthew Webster Autos Ltd is financially solvent with positive net assets and steady investment in fixed assets but faces liquidity challenges due to persistent negative working capital. The company must prioritize improving cash flow management and working capital to strengthen its financial resilience and support sustainable growth.

MATTHEW WEBSTER AUTOS LTD - Analysis Report

Company Number: 13942733

Analysis Date: 2025-07-20 13:40 UTC

Financial Health Assessment of MATTHEW WEBSTER AUTOS LTD

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1. Financial Health Score: C+

Explanation:
The company demonstrates modest net asset growth and stable fixed assets, but persistent negative working capital (net current liabilities) signals liquidity stress. The financials suggest a business in a fragile but not critical state—capable of continuing operations but requiring careful management of cash flow and liabilities.

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2. Key Vital Signs

Metric	Latest Year (2025)	Interpretation
Fixed Assets	£22,442	Gradual investment in long-term assets, showing operational capacity growth. Healthy sign.
Current Assets	£64,234	Adequate short-term assets (cash, stock, debtors). Positive, but needs context versus liabilities.
Current Liabilities	£75,446	Higher short-term obligations. Warning sign for liquidity.
Net Current Assets	-£10,335	Negative working capital indicates potential cash flow constraints—“symptom of distress” in liquidity.
Net Assets (Equity)	£11,107	Positive equity, showing business value above liabilities. Small but stable net worth.
Shareholders Funds	£11,107	Equity financed primarily by owner, reflecting capital stability.

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3. Diagnosis

• Liquidity Stress: The company shows persistent negative net current assets over four years, meaning current liabilities exceed current assets. This “cash flow imbalance” is a crucial symptom that could jeopardize the ability to meet short-term obligations without external funding or improved cash collection.

• Asset Growth and Stability: Fixed assets have increased steadily, indicating investment in business infrastructure—this is a healthy sign that the company is building capacity.

• Equity Position: Positive net assets and shareholders’ funds indicate the company is solvent and has value after paying all liabilities. This reflects a baseline financial “health” but the margin is narrow.

• Operating Scale: As a micro-entity with only 2 employees and relatively small asset and liability figures, the company is very much in a start-up or early growth phase, where financial resilience is limited.

Overall, the company resembles a patient with stable vital signs but presenting early “symptoms of distress” in liquidity that require close monitoring and intervention to prevent deterioration.

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4. Recommendations

• Improve Working Capital Management:

  • Tighten credit control to speed up debtor collections.
  • Negotiate longer payment terms with suppliers to reduce immediate outflows.
  • Consider short-term financing options or overdrafts to cover temporary liquidity gaps.

• Cash Flow Forecasting:
  Implement detailed cash flow forecasting to anticipate periods of cash shortfall and plan accordingly. This will serve as an early warning system.

• Cost Control:
  Review operating costs to identify potential savings, especially given the small size of the business where every saving can materially improve liquidity.

• Build Liquidity Reserves:
  Aim to increase current assets relative to liabilities over time to create a “cash buffer” that can absorb shocks without threatening solvency.

• Monitor Financial Ratios Regularly:
  Track key ratios such as current ratio, quick ratio, and net asset trend quarterly to detect any further signs of financial distress early.

• Strategic Growth Planning:
  Align capital investments with projected cash flows to avoid overextension that could worsen liquidity imbalance.

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