PARRY POWER UTILITIES LIMITED

Executive Summary

Parry Power Utilities Limited is a newly incorporated micro-entity with a solid asset base but exhibits negative working capital, indicating potential short-term liquidity pressure. While the company remains solvent with positive net assets, attention to cash flow management and working capital improvement is essential to ensure continued financial health as it grows.

PARRY POWER UTILITIES LIMITED - Analysis Report

Company Number: 14721055

Analysis Date: 2025-07-20 14:51 UTC

Financial Health Assessment: Parry Power Utilities Limited

---

1. Financial Health Score: C

Explanation:
The company shows a modest net asset base (£41,066) but exhibits a significant working capital deficit (negative net current assets of £95,814). This indicates some liquidity stress or short-term financial imbalance, though the total assets still exceed immediate liabilities. Given it is a newly incorporated micro-entity with only two employees, this is not uncommon in early growth phases but warrants close monitoring. Overall, the financial health is fair but with notable caution around short-term obligations.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	136,880	Solid long-term investment in physical or intangible assets, indicating capital commitment.
Current Assets	148,674	Available short-term resources including cash and receivables; adequate but not high.
Current Liabilities	244,488	Debts due within one year; relatively high compared to current assets indicating liquidity risk.
Net Current Assets	-95,814	Negative working capital; potential "symptom of distress" in meeting short-term liabilities.
Total Assets Less Current Liabilities	41,066	Positive but small buffer; net assets indicate some cushion for creditors and owners.
Net Assets / Shareholders’ Funds	41,066	Positive equity base reflecting retained capital and initial funding.
Number of Employees	2	Very small team, consistent with micro-entity status.

Vital Sign Interpretation:

• The negative net current assets suggest the company might be relying on longer-term assets or external financing to cover short-term debts—a "cash flow strain" symptom.
• The positive net assets show the company has value beyond immediate liabilities, which is a "healthy heart" sign for solvency.
• The relatively high fixed assets indicate investment in operational capacity, which could support future revenue generation.

---

3. Diagnosis

Parry Power Utilities Limited is a very young micro-entity engaged in electrical installation, with two directors who are also electrical engineers. The company has made significant capital investments early on, as evidenced by fixed assets of £136,880, which is a positive "structural foundation." However, the company's current liabilities outstrip current assets by nearly £96k, signaling potential liquidity challenges or timing mismatches in cash flow—this is akin to the business "experiencing shortness of breath" financially.

The positive net assets show the company is solvent at the reporting date, but the working capital deficit requires management attention. This is typical for start-ups investing upfront but not yet generating steady cash inflows. The absence of audit requirements due to micro-entity status means less external scrutiny, so internal financial controls are important.

---

4. Recommendations

• Improve Working Capital Management:
  Explore ways to reduce current liabilities or accelerate receivables collection to alleviate the negative working capital. This might include negotiating longer payment terms with suppliers or drawing on short-term financing to smooth cash flow.

• Monitor Cash Flow Closely:
  Regular cash flow forecasts should be prepared to anticipate and manage liquidity crunches. Consider setting up a cash reserve or overdraft facility as a "financial breathing aid."

• Leverage Asset Base:
  The fixed assets represent a valuable resource. Evaluate whether these can be used more efficiently or leveraged (e.g., as collateral for loans) to support working capital needs.

• Growth Strategy Alignment:
  Ensure that growth plans and capital expenditure align with cash generation capabilities to avoid overextension.

• Financial Reporting and Controls:
  Despite micro-entity exemptions, maintain robust accounting records and consider periodic internal reviews to identify financial "symptoms" early.

---