MGRACEM LTD

Executive Summary

MGRACEM LTD exhibits strong financial health for a micro-entity, with consistent revenue growth, profitability, and a positive cash position. The company operates with tight margins typical of its industry and size but shows no distress signals. To enhance financial wellness and sustainability, focus on margin improvement, operational scaling, and robust cash flow management.

MGRACEM LTD - Analysis Report

Company Number: 13447084

Analysis Date: 2025-07-20 18:26 UTC

Financial Health Assessment Report: MGRACEM LTD

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1. Financial Health Score: B

Explanation:
MGRACEM LTD demonstrates steady revenue growth and positive net assets over the past years, reflecting a generally healthy financial position for a micro-entity. The company shows solid working capital (net current assets) and consistent profitability. However, the relatively low turnover and modest profit margins, together with no employees and a single director, suggest limited operational scale and potential vulnerability to market fluctuations. Thus, the company earns a "B" grade, indicating good health with room for strengthening resilience and scalability.

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2. Key Vital Signs

Metric	2025 Value (£)	Interpretation
Turnover (Revenue)	98,157	Nearly doubled from prior year, showing strong top-line growth.
Profit for Period	12,777	Positive profit margin (~13%), indicating efficient cost management.
Cost of Materials	82,953	High proportion (~85%) of turnover, suggesting thin margins.
Current Assets	12,776	All liquid assets; good short-term liquidity.
Net Current Assets	12,776	Positive working capital, indicating ability to meet short-term debts.
Net Assets (Shareholders' Funds)	12,777	Positive equity base; company is solvent.
Employee Count	0	Sole director likely manages operations; no staff costs.

Interpretation:

• The "vital signs" show a business with a healthy cash position relative to its size and positive retained earnings, indicating no immediate liquidity distress symptoms.
• The steady rise in turnover and profit is a positive symptom of business growth and operational efficiency.
• However, the high cost of materials as a proportion of turnover reflects tight margins—a symptom that the company should monitor carefully to avoid pressure on profitability.
• The absence of employees means operational risk is concentrated on the director, which may pose scalability and continuity risks.

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3. Diagnosis

MGRACEM LTD is financially stable and solvent, with a positive equity base and growing revenues. The company’s cash flow position is "healthy," with sufficient current assets to cover short-term liabilities comfortably. Profitability is present but constrained by high material costs, indicating the business operates with relatively thin margins typical of small electrical installation firms.

The company’s micro size and sole director structure suggest it is in an early or niche stage, potentially limiting operational capacity and diversification. The steady improvement in financial results over the last two years indicates a recovering or growing business rather than one in distress.

No signs of financial distress, such as negative working capital, losses, or excessive liabilities, are evident. However, the thin margin "symptom" signals a need for cautious cost control and revenue growth strategies.

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4. Recommendations

• Margin Improvement: Explore ways to reduce material costs or increase pricing power to improve profit margins, such as negotiating better supplier terms or adding value-added services.
• Diversify Revenue Streams: Consider expanding service offerings or customer base to reduce reliance on a narrow niche and smooth income volatility.
• Build Operational Capacity: Evaluate hiring or subcontracting options to expand operational bandwidth while maintaining cost discipline. This can reduce dependency risk on the sole director.
• Cash Flow Monitoring: Maintain diligent cash flow management to ensure liquidity remains strong, especially given the tight margins. Regular forecasting will help anticipate any shortfalls.
• Formal Financial Planning: Develop budgets and financial forecasts to guide growth and investment decisions, ensuring alignment with market opportunities and risk appetite.
• Risk Management: Given the sole director and no employees, consider succession planning or risk mitigation strategies to safeguard business continuity.

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