MIKE BUFTON BUILDING & ELECTRICAL SERVICES LTD

Executive Summary

MIKE BUFTON BUILDING & ELECTRICAL SERVICES LTD shows signs of early liquidity challenges, with negative working capital in the latest financial year despite investments in fixed assets. While the company's equity remains positive, careful cash flow management and cost control are critical to prevent financial distress. Taking targeted steps to improve working capital and monitor finances will support a healthier financial future.

MIKE BUFTON BUILDING & ELECTRICAL SERVICES LTD - Analysis Report

Company Number: 14026098

Analysis Date: 2025-07-29 16:30 UTC

Financial Health Assessment: MIKE BUFTON BUILDING & ELECTRICAL SERVICES LTD

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1. Financial Health Score: C

Explanation:
The company shows a mixed financial condition with some positive elements but also signs of financial stress. The net assets are positive but declining, and current liabilities exceed current assets in the latest year, indicating potential liquidity issues. As a micro-entity in a capital-intensive sector, this score reflects a cautious outlook with room for improvement.

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2. Key Vital Signs: Critical Metrics and Interpretation

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	10,025	5,097	Investment in long-term assets increased, indicating capital expenditure or asset acquisition.
Current Assets	4,552	12,804	Significant decrease, potential reduction in cash, receivables, or stock—warning sign for liquidity.
Current Liabilities	5,451	6,343	Slight decrease but still exceeds current assets in 2024, indicating working capital strain.
Net Current Assets (Working Capital)	-899	6,461	Negative in 2024 from strongly positive in 2023; symptom of liquidity distress or cash flow challenges.
Total Assets Less Current Liabilities	9,126	11,558	Declined, reflecting overall reduction in net assets available after short-term liabilities.
Creditors > 1 Year	4,500	6,450	Improvement in long-term liabilities, possibly through repayments or restructuring.
Net Assets (Shareholders Funds)	4,626	5,108	Declined marginally, indicating erosion of equity base.
Average Employees	2	1	Increase in workforce, possibly reflecting business growth or operational scaling.

Interpretation of Vital Signs:

• The negative working capital in the latest year is a key symptom of financial distress, indicating the company may struggle to meet short-term obligations from current assets.
• The decline in current assets is concerning, possibly due to cash depletion or slower collection of receivables.
• The increase in fixed assets suggests ongoing investment in business infrastructure, which can be positive if funded sustainably.
• Reduction in long-term creditors signals some debt servicing but also reduces financial flexibility.

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3. Diagnosis: What the Financial Data Reveals

The company is experiencing symptoms of liquidity stress evidenced by the negative net current assets. While the business has invested in fixed assets, which could support future operations and revenue, the sharp fall in current assets and working capital signals a potential cash flow crunch. This could impact the company’s ability to pay suppliers and meet day-to-day expenses without securing additional financing.

The reduction in shareholders’ funds, although modest, suggests the company might be operating at a tight margin or absorbing losses, which is typical for a young company still establishing itself (incorporated in 2022). The increase in employee numbers may indicate growing operational demands but adds to fixed costs.

Overall, the financial condition resembles a patient with early warning signs of distress but not yet critical. The company should monitor cash flow closely and manage liabilities prudently.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Improve Working Capital Management:

  • Tighten credit control to accelerate receivables collection.
  • Review inventory levels to free up cash tied in stock.
  • Negotiate extended payment terms with suppliers to ease short-term cash outflows.

• Cash Flow Forecasting and Monitoring:

  • Develop a rolling cash flow forecast to proactively identify liquidity gaps.
  • Explore short-term financing options (overdrafts, invoice financing) to bridge temporary cash shortfalls.

• Profitability and Cost Control:

  • Analyze cost drivers and implement cost-saving measures to improve margins.
  • Evaluate pricing strategies to ensure sustainable profitability.

• Asset Utilization:

  • Review fixed asset acquisitions to ensure they contribute to revenue growth and do not overstrain finances.
  • Consider leasing or selling non-essential assets to improve liquidity.

• Strategic Growth Planning:

  • Align workforce growth with revenue projections to avoid overstretching resources.
  • Explore diversification within the electrical and construction domains to stabilize income streams.

• Engage Financial Advisors:

  • Consider consultation with financial experts to optimize capital structure and explore funding alternatives.

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