Company Number: 13231977

Analysis Date: 2025-07-29 12:32 UTC

Financial Health Assessment for MJN ELECTRICAL LTD

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1. Financial Health Score: B

Explanation:
MJN ELECTRICAL LTD demonstrates a sound financial position for a micro-entity with a positive net asset base and improving working capital. While the company is relatively young and small, the balance sheet indicates financial stability with no signs of distress. However, the tight current liabilities compared to current assets and modest fixed asset base suggest room for cautious cash flow management and potential growth challenges. Hence, a "B" grade reflects generally healthy finances with some attention needed to liquidity dynamics.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	3,992	Modest investment in long-term assets typical for a small electrical installation business.
Current Assets	7,772	Healthy short-term asset base, primarily cash or receivables, showing liquidity potential.
Current Liabilities	8,679	Slightly higher than current assets, indicating short-term obligations exceed liquid assets.
Net Current Assets	(907)	Negative working capital suggests a potential cash flow pressure in meeting short-term debts.
Total Assets Less CL	3,085	Reflects total asset value after covering current liabilities, showing positive net assets.
Net Assets / Equity	3,085	Positive shareholder funds indicate retained earnings or capital injections sustaining the firm.
Employee Count	2	Small workforce consistent with micro company scale and focused operations.

Interpretation of Vital Signs:

• The company holds positive net assets, a vital sign of financial viability and investor confidence.
• Negative net current assets (working capital) is a symptom of liquidity tension, requiring careful cash flow monitoring to ensure operational expenses and obligations are met timely.
• Fixed assets are stable but modest, indicating no heavy investment or recent asset write-downs.
• Employee size is small, aligning with a focused service operation and manageable overheads.

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3. Diagnosis

MJN ELECTRICAL LTD exhibits the characteristics of a financially stable micro-entity operating in electrical installation. The balance sheet reveals a firm with positive equity and a solid asset base relative to liabilities. However, the negative working capital is a symptom of potential liquidity stress—current liabilities slightly surpass current assets, which could strain the company’s ability to pay short-term debts if cash inflows are not timely.

The company is managing a delicate balance between assets and liabilities, typical for a small business in its early years. The steady rise in net assets from £2,061 in 2023 to £3,085 in 2024 is a healthy sign, indicating retained profits or capital contributions contribute to an improving financial buffer.

The symptoms do not currently indicate severe distress but suggest the business should focus on strengthening its cash conversion cycle, possibly by accelerating receivables, managing payables, or maintaining a cash reserve.

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4. Recommendations

• Enhance Cash Flow Management:
  Implement tighter monitoring of receivables and payables to avoid liquidity crunch. Consider negotiating better payment terms with suppliers or clients to improve working capital.

• Build Cash Reserves:
  Aim to increase cash or liquid assets to cover at least 3-6 months of operating expenses, providing a cushion against unforeseen short-term liabilities.

• Cost Control and Efficiency:
  Review operational expenses regularly to ensure overheads align with revenue, especially given the small employee base.

• Plan for Growth Investment:
  As fixed assets remain modest, consider strategic investments in equipment or technology that could improve service delivery efficiency and competitive positioning.

• Regular Financial Review:
  Maintain routine financial health check-ups to identify early warning signs of distress and to track improvement in working capital metrics.

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