PETER FORREST JOINERY LIMITED

Executive Summary

Peter Forrest Joinery Limited demonstrates stable asset growth and modest equity but faces ongoing liquidity challenges due to persistent negative working capital. The company’s financial health is fair but fragile, requiring focused cash flow management and operational adjustments to improve stability and avoid distress. With proactive measures, the outlook can be improved.

PETER FORREST JOINERY LIMITED - Analysis Report

Company Number: SC685359

Analysis Date: 2025-07-20 15:29 UTC

Financial Health Assessment for PETER FORREST JOINERY LIMITED

---

1. Financial Health Score: C

Explanation:
The company shows some stable asset growth and modest net asset base but exhibits persistent working capital deficits (net current liabilities) indicating liquidity strain. The overall financial condition is fair but with symptoms that require close monitoring and proactive management to avoid distress.

---

2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	59,363	Increased, showing investment in long-term resources. Healthy sign of capacity building.
Current Assets	87,762	Decreased from previous year, indicating reduced liquid resources.
Current Liabilities	102,450	Slightly reduced but still high, indicates short-term obligations remain significant.
Net Current Assets	(14,688)	Negative working capital; "symptom of liquidity stress" — company owes more than it can immediately cover.
Total Assets less Current Liabilities	44,675	Positive but moderate buffer beyond immediate liabilities.
Long-term Liabilities	25,512	New long-term debt introduced; could be useful if well managed but adds financial burden.
Net Assets (Equity)	19,163	Positive and growing, indicating retained earnings and shareholder value, but relatively small.
Share Capital	500	Very low; typical for micro entities but means limited cushion from equity injections.
Employee Numbers	2 (down from 5)	Significant reduction in workforce may indicate cost-cutting or lower activity.

---

3. Diagnosis

• Liquidity & Working Capital (Vital Sign: Net Current Assets Negative):
  The company consistently shows negative net current assets over the last 3 years, indicating it has more short-term obligations than readily available current assets. This is a "symptom of financial strain" that could hamper day-to-day operations and supplier confidence if not addressed.

• Asset Growth & Stability:
  Fixed assets have nearly doubled in the latest year, suggesting investment in equipment or property to support operations — a healthy sign of business development. However, the decrease in current assets alongside increased current liabilities signals cash flow pressures.

• Leverage & Long-Term Debt:
  The introduction of £25,512 in long-term liabilities in 2024 signals new borrowing. While this can provide needed capital, it also increases financial risk and requires reliable cash flow to service.

• Equity Position:
  Net assets have increased slightly, which is positive and reflects some retained earnings or revaluation gains. However, at £19,163, the equity base is modest, offering limited buffer against shocks.

• Operational Efficiency:
  The reduction in employees from 5 to 2 may reflect attempts to streamline costs, but could impact capacity and revenue generation.

• Overall Financial Condition:
  The company is in a fragile but manageable state. It has a foundation of fixed assets and positive equity but faces ongoing liquidity challenges. If not managed, these symptoms could evolve into more severe distress.

---

4. Recommendations

1. Improve Working Capital Management:

   • Accelerate debtor collections and negotiate extended payment terms with suppliers.
   • Monitor inventory levels to avoid cash being tied up unnecessarily.

2. Cash Flow Forecasting & Controls:

   • Implement detailed cash flow forecasting to anticipate shortfalls.
   • Maintain a cash buffer to manage unexpected outflows.

3. Debt Management:

   • Ensure that new long-term debt is structured with manageable repayment schedules.
   • Avoid incurring additional short-term liabilities that exacerbate liquidity pressure.

4. Operational Review:

   • Assess the impact of reduced staffing on service delivery and revenue.
   • Explore opportunities to increase revenue streams with current resources.

5. Equity Injection Consideration:

   • If possible, consider additional shareholder funding to strengthen the equity base and provide working capital relief.

6. Regular Financial Health Monitoring:

   • Monitor key metrics quarterly rather than annually to catch early warning signs.

---

Medical Analogy Summary:
PETER FORREST JOINERY LIMITED shows signs of a "chronic liquidity condition" with persistent negative working capital acting like a "heart stress" symptom. The company has a "healthy skeleton" of fixed assets but needs to improve "blood flow" (cash flow) to maintain operational vitality. Without intervention, the liquidity symptoms could worsen, but with proper care (working capital management and debt control), recovery and growth are achievable.

---