MATTIA ORRU ELECTRICAL SERVICES LTD

Executive Summary

MATTIA ORRU ELECTRICAL SERVICES LTD shows a stable equity base but is experiencing short-term liquidity strain, evidenced by negative working capital. The company’s modest asset base and no employees reflect its micro-sized structure, with the director having full control. Immediate focus on improving cash flow and working capital management is essential to maintain financial health and support sustainable growth.

MATTIA ORRU ELECTRICAL SERVICES LTD - Analysis Report

Company Number: 14120511

Analysis Date: 2025-07-20 17:36 UTC

Financial Health Assessment for MATTIA ORRU ELECTRICAL SERVICES LTD

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1. Financial Health Score: C

Explanation:
The company shows signs of operational continuity but has some warning flags around liquidity and working capital management. The net current liabilities indicate a "symptom of distress" in short-term financial health, though overall net assets remain positive, reflecting a modestly stable equity base. Given the company’s micro size and early stage, this score reflects cautious optimism with areas needing improvement.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£5,750	Small asset base, consistent with a micro electrical services company relying on basic equipment.
Current Assets	£10,696	Cash and receivables show some liquidity but not sufficient to cover current liabilities fully.
Current Liabilities	£11,852	Short-term debts exceed current assets, indicating a liquidity crunch.
Net Current Assets	-£1,156	Negative working capital signals potential cash flow problems ("unhealthy cash flow").
Net Assets (Shareholders’ Funds)	£3,669	Positive but declining net equity, showing some retained value but slight erosion from prior year.
Capital and Reserves	£3,669	Equity remains positive, but the reduction from previous year suggests small losses or withdrawals.
Employee Count	NIL	No employees beyond the director, indicating very lean operations or possibly subcontracted labor.

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3. Diagnosis

• Symptoms Analysis:
  The company’s negative net current assets (working capital) suggest it may struggle to meet short-term obligations without additional financing or improved cash flow. This is a key "symptom of distress," common in early-stage or micro businesses. The fixed asset base is small and slightly decreased from the prior year, which may indicate asset disposals or lack of reinvestment. Net assets have marginally declined from £4,016 to £3,669, implying minor losses or distributions.

• Underlying Business Health:
  The business is in its infancy (incorporated 2022) and operating in the electrical installation sector, likely with low overheads (no employees). The director holds full control and ownership, which can be positive for streamlined decision-making but may limit financial resources. The company is compliant with filing deadlines and not in liquidation, which is reassuring.

• Liquidity Concerns:
  The key concern is the negative working capital. Without a healthy buffer of current assets over current liabilities, the company is at risk of cash flow bottlenecks, which could impair its ability to pay suppliers or meet operational expenses promptly.

• Equity Position:
  Positive net assets indicate the company’s total assets exceed liabilities, a "healthy baseline," but the declining trend should be monitored.

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4. Recommendations

• Improve Working Capital Management:

  • Accelerate receivables collection to boost current assets.
  • Negotiate longer payment terms with suppliers to reduce current liabilities pressure.
  • Monitor cash flow daily to identify and manage shortfalls proactively.

• Cost Control and Profitability:

  • Review pricing and contract terms to enhance margins.
  • Avoid unnecessary asset disposals that could weaken the fixed asset base unless strategically justified.

• Capital Injection or Financing Options:

  • Consider additional capital input from the owner or external sources to bolster liquidity if required.
  • Explore short-term financing options such as overdrafts or invoice financing to smooth cash cycles.

• Strategic Growth Planning:

  • As a micro entity with no employees, plan for cautious growth with attention to sustainable operational scale.
  • Possibly engage subcontractors or part-time help only as needed to control fixed overheads.

• Regular Financial Monitoring:

  • Establish monthly or quarterly financial reviews to catch symptoms of financial distress early.
  • Use simple cash flow forecasts to anticipate and mitigate liquidity gaps.

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