PARRY & CULLEN ELECTRICAL LTD

Executive Summary

Parry & Cullen Electrical Ltd exhibits strong financial health with improving net assets, excellent liquidity, and manageable debt levels. The company’s "healthy cash flow" and positive retained earnings signal sustainable operational performance. Continued focus on debt management and cash optimization will support ongoing financial wellness and growth prospects.

PARRY & CULLEN ELECTRICAL LTD - Analysis Report

Company Number: 12864929

Analysis Date: 2025-07-19 12:04 UTC

Financial Health Assessment for PARRY & CULLEN ELECTRICAL LTD

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1. Financial Health Score: B

Explanation:
PARRY & CULLEN ELECTRICAL LTD demonstrates solid financial fundamentals with improving net assets, healthy liquidity, and manageable liabilities. The company shows signs of growth and stability but carries a moderate level of long-term obligations which warrants monitoring. The score "B" reflects a generally healthy financial condition with some areas for cautious management.

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2. Key Vital Signs

Metric	Value (as at 31 March 2024)	Interpretation
Net Assets	£47,701	Positive net assets indicate the company’s total assets exceed liabilities—sign of financial strength.
Current Assets	£89,314	Healthy level of current assets, including cash and receivables, for meeting short-term obligations.
Cash Balance	£65,102	Strong cash reserves provide liquidity cushion — "healthy cash flow" symptom.
Current Liabilities	£11,029	Low short-term debts relative to assets; indicates good working capital management.
Net Current Assets (Working Capital)	£78,285	Indicates comfortable buffer to cover short-term liabilities — good operational liquidity.
Long-Term Liabilities	£55,209	Moderate long-term finance lease obligations to monitor, potentially impacting future cash flow.
Profit and Loss Reserve	£47,699	Accumulated profits retained in the business, showing positive retained earnings growth.
Tangible Fixed Assets	£24,625	Investment in plant, machinery, and vehicles supports operational capacity and asset base.
Debtors (Trade Receivables)	£24,212	Moderate receivables, manageable and not overly high, suggesting efficient credit control.

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3. Diagnosis: Financial Condition Analysis

• Liquidity & Cash Flow:
  The company has a very "healthy cash flow" with cash holdings of £65,102, which comfortably cover current liabilities of £11,029. This strong liquidity position reduces risk of short-term financial distress and enables operational flexibility.

• Working Capital & Operational Health:
  Net current assets of £78,285 indicate that day-to-day operational expenses and short-term debts can be met without stress. This is a key "vital sign" of business health, showing no symptoms of cash crunch or working capital strain.

• Solvency & Leverage:
  While net assets have improved from £33,366 to £47,701 year-on-year, the company carries long-term liabilities (£55,209) primarily from finance leases and hire purchase contracts. This level of debt is not excessive but should be carefully managed to avoid "symptoms of distress" such as interest pressure or refinancing risk.

• Profitability & Retained Earnings:
  The profit and loss reserve has increased steadily, reflecting ongoing profitability and reinvestment in the business. This positive trend supports growth and strengthens equity.

• Asset Management:
  Fixed assets have decreased slightly, possibly due to depreciation or asset disposals, but remain significant at £24,625. The mix of plant, machinery, and vehicles suggests operational capacity is maintained.

• Company Size & Growth Stage:
  Incorporated in 2020, the company is relatively young but shows promising financial development, with net assets and cash balances steadily improving. The small workforce (average 2 employees) aligns with the "Small" company profile.

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4. Recommendations for Financial Wellness Improvement

1. Monitor Long-Term Debt:
   The company should keep a close eye on finance lease obligations to ensure these do not become a "chronic illness" for liquidity. Consider refinancing options or gradual debt reduction strategies to lower interest costs and improve solvency.

2. Maintain Strong Cash Reserves:
   Continue to preserve robust cash balances to handle unexpected expenses and seasonal fluctuations, ensuring the "heart" of the business—cash flow—remains strong.

3. Credit Control & Debtor Management:
   Though current receivables are reasonable, tightening credit terms where possible and accelerating debtor collections will improve cash flow and reduce working capital tied up in trade debtors.

4. Asset Utilization Review:
   Review fixed asset usage and condition regularly to avoid over-investment or under-utilization. Consider asset disposals or upgrades aligned with business growth to optimize operational efficiency.

5. Profit Reinvestment & Growth Planning:
   Use retained earnings strategically to invest in growth opportunities, marketing, or technology that can expand the customer base and increase profitability.

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