PHASE ELECTRICAL (GS) LTD

Executive Summary

PHASE ELECTRICAL (GS) LTD is currently experiencing significant financial strain, characterized by persistent negative working capital and minimal equity, which are symptoms of underlying liquidity challenges. Immediate actions focused on improving cash flow management, cost control, and capital structure are essential to restore the company’s financial health and secure its operational future.

PHASE ELECTRICAL (GS) LTD - Analysis Report

Company Number: 13161702

Analysis Date: 2025-07-29 20:53 UTC

Financial Health Assessment of PHASE ELECTRICAL (GS) LTD

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1. Financial Health Score: D

Explanation:
The company shows clear symptoms of financial distress, primarily due to persistent negative working capital (net current assets) over several years. While it remains active and solvent on paper, its liquidity position is weak, with current liabilities exceeding current assets by a significant margin. The very low shareholders' funds and declining net asset base further highlight vulnerability. This score indicates caution and a need for immediate remedial action to restore financial health.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£9,384	Mainly cash; no trade debtors reported in 2024.
Current Liabilities	£16,826	Short-term obligations higher than assets.
Net Current Assets (Working Capital)	-£7,442	Negative indicates liquidity strain.
Total Assets Less Current Liabilities	£244	Very thin buffer after short-term debts.
Shareholders' Funds	£244	Declined sharply from prior years; minimal equity.
Fixed Assets (Net Book Value)	£7,686	Tangible assets exist but relatively low.
Cash Position	£9,384	Cash has decreased, which may impact operations.

Interpretation:

• Negative Working Capital (“symptom of distress”): The company consistently has more current liabilities than current assets, indicating potential problems meeting short-term obligations.
• Declining Shareholders’ Equity: The equity has reduced from £1,392 in 2021 to just £244 in 2024, suggesting accumulated losses or depletion of reserves.
• Cash Reliance: Cash is the sole component of current assets in 2024, with no reported trade debtors, indicating either delayed sales on credit or write-offs of receivables. The cash balance itself is low and declining.
• Asset Depreciation: Fixed assets have decreased in net book value, which may be due to normal depreciation or asset disposals; this could impact productive capacity if critical equipment is lost.

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3. Diagnosis

PHASE ELECTRICAL (GS) LTD is exhibiting chronic liquidity issues, akin to a patient with a weakened immune system. The company’s negative working capital over multiple years signals an ongoing struggle to cover short-term debts with readily available assets. This "cash flow imbalance" is a critical symptom pointing to operational or financial inefficiency.

The minimal shareholders’ funds and very slim total assets less current liabilities margin suggest that the company has little equity cushion to absorb shocks or losses. The absence of trade debtors in the latest year could indicate tightened credit control, but also may reflect reduced sales or write-offs, which are worrying signs.

Together, these symptoms suggest the company is financially fragile, vulnerable to cash flow disruptions, and at risk of insolvency if new capital or improved profitability is not achieved.

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4. Recommendations

To restore financial wellness, PHASE ELECTRICAL (GS) LTD should consider the following steps:

• Improve Liquidity Management:

  • Accelerate cash collections and reassess credit policies to rebuild trade receivables.
  • Negotiate extended payment terms with suppliers to ease current liabilities pressure.

• Cost Control and Profitability:

  • Review operating expenses to identify cost-saving opportunities.
  • Evaluate pricing strategies and market positioning to boost turnover.

• Capital Injection:

  • Consider raising additional equity or securing short-term financing to bolster working capital and provide a financial buffer.

• Asset Management:

  • Assess fixed assets for potential sale if non-essential, to generate cash.
  • Ensure maintenance of key equipment to avoid operational disruptions.

• Regular Financial Monitoring:

  • Implement monthly cash flow forecasting to detect and address liquidity gaps early.
  • Engage professional advice to develop a turnaround plan if needed.

By addressing these areas proactively, the company can stabilize its financial position and improve its resilience against future shocks.

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