P CUNNINGHAM ELECTRICAL LTD

Executive Summary

P Cunningham Electrical Ltd is a small, active electrical installation business with a stable equity base and recent capital investment. However, a significant decline in current assets and increased short-term liabilities have resulted in negative working capital, indicating liquidity pressure. Credit approval is suitable with conditions to monitor cash flow and working capital closely to mitigate short-term repayment risk.

P CUNNINGHAM ELECTRICAL LTD - Analysis Report

Company Number: SC708531

Analysis Date: 2025-07-20 14:27 UTC

1. Credit Opinion: APPROVE with caution. P Cunningham Electrical Ltd is a micro-entity with a short operating history since incorporation in 2021. The company shows positive net assets and modest growth in fixed assets, indicating some reinvestment. However, the significant drop in current assets and increase in current liabilities in 2024 results in a negative net working capital position, suggesting liquidity pressure. The absence of overdue filings and a single employee implies a small, manageable operation. Credit approval is reasonable given current size and solvency, but ongoing monitoring of liquidity and receivables management is advised.

2. Financial Strength: The balance sheet shows total net assets of £1,934 as of September 2024, up from £902 the prior year, reflecting modest equity growth. Fixed assets increased substantially to £18,327 from £1,436, likely indicating capital investment in equipment. Current assets have dropped sharply from £9,437 to £1,925, while current liabilities nearly doubled from £9,971 to £18,318, causing net current assets to swing from positive £534 to negative £16,393. Overall, the company remains solvent but liquidity is constrained and working capital is negative, which could stress day-to-day operations.

3. Cash Flow Assessment: The sharp decrease in current assets alongside rising current liabilities suggests cash or receivables were converted or depleted, possibly to fund fixed asset purchases or cover payables. Negative net working capital of £16,393 indicates potential short-term cash flow challenges. With only one employee and a micro-entity scale, cash flow management is critical. Without detailed P&L or cash flow statements, caution is warranted, but the current liquidity profile flags a need for close cash flow monitoring.

4. Monitoring Points:

   • Liquidity Metrics: Track current ratio and quick ratio to ensure short-term obligations remain manageable.
   • Receivables and Payables Aging: Monitor collections and supplier payment terms to avoid cash flow strain.
   • Capital Expenditure Impact: Assess whether fixed asset investments generate corresponding revenue growth.
   • Profitability Trends: Review future filings for profit margins and retained earnings progression to support equity growth.
   • Director Conduct and Compliance: Maintain oversight of timely filings and any changes in management or PSC status.