PJG ACCOUNTING LTD

Executive Summary

PJG ACCOUNTING LTD is demonstrating growth with increased equity and asset investment but currently faces liquidity challenges evidenced by negative working capital. Immediate focus on cash flow management and working capital improvement is essential to stabilize short-term financial health and support sustainable growth. With targeted actions, the company can recover financial balance and capitalize on its expanding business foundation.

PJG ACCOUNTING LTD - Analysis Report

Company Number: 13553902

Analysis Date: 2025-07-29 20:52 UTC

Financial Health Assessment for PJG ACCOUNTING LTD

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1. Financial Health Score: C

Explanation:
PJG ACCOUNTING LTD exhibits mixed financial health. It has shown growth in asset base and shareholder equity over the last year, which is a positive sign. However, the company is currently exhibiting symptoms of liquidity strain, notably a negative working capital position (current liabilities exceed current assets), which signals potential difficulty in meeting short-term obligations. Given that this is a micro-entity with a short trading history, the assessment scores a "C" to reflect a need for improved liquidity management while acknowledging growth potential.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	20,173	Significant increase indicating investment in long-term assets or equipment.
Current Assets	13,568	Increased from prior year but still low compared to liabilities.
Current Liabilities	23,777	Substantial short-term debts; exceeds current assets, indicating liquidity pressure.
Net Current Assets (Working Capital)	-10,209	Negative working capital is a warning of cash flow stress; company may struggle to pay bills.
Shareholders’ Funds (Equity)	10,297	Improved markedly, signifying retention of earnings or new capital injection.
Average Number of Employees	2	Small workforce consistent with micro-entity status; manageable overheads.

Interpretation of Vital Signs:

• The company’s fixed assets have increased notably, suggesting capital investment, which is healthy if financed sustainably.
• The negative working capital is a key symptom of distress, indicating that current liabilities outstrip current assets by over £10k, a liquidity red flag.
• The rise in shareholders' equity is positive, showing the business has strengthened its net worth, which is like improved "immune strength" for the business.
• Overall, the business is growing but experiencing short-term cash flow "breathing difficulties."

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3. Diagnosis: Financial Condition and Underlying Health

PJG ACCOUNTING LTD is a young, micro-sized accounting services firm showing early-stage growth with an expanding asset base and increasing equity. However, the company is currently exhibiting symptoms of liquidity stress, as highlighted by negative working capital. This suggests that while the business is building its foundation, it may face challenges in meeting immediate financial obligations without either converting fixed assets to cash or securing additional short-term funding.

The rise in fixed assets could be a double-edged sword — if these investments are illiquid or not generating immediate returns, they could be exacerbating cash flow pressure. The company’s small employee base keeps overheads low, which is positive.

There is no indication of insolvency or severe distress at this stage, but the symptom of cash flow strain requires attention to prevent progression to financial "illness" such as missed payments, penalties, or creditor disputes.

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4. Recommendations: Prescriptions for Financial Wellness

• Improve Liquidity Management:

  • Implement rigorous cash flow forecasting to anticipate shortfalls and manage payment timing.
  • Consider negotiating extended payment terms with creditors or arranging short-term financing (e.g., overdraft or invoice factoring) to ease liquidity pressure.

• Asset Utilization Review:

  • Evaluate the fixed assets acquired to ensure they are productive and not tying up cash unnecessarily. If possible, convert non-essential fixed assets into cash to improve working capital.

• Strengthen Working Capital:

  • Accelerate debtor collections and review credit policies to reduce outstanding receivables and increase current assets.
  • Control costs tightly and avoid unnecessary expenditures until liquidity improves.

• Capital Injection or Loan:

  • If liquidity pressure persists, consider additional equity funding from shareholders or a manageable loan to bolster cash reserves.

• Regular Financial Health Monitoring:

  • Establish key performance indicators (KPIs) around liquidity and profitability to detect early warning signs in future periods.

• Maintain Compliance:

  • Continue timely filing of accounts and confirmation statements to avoid penalties and maintain business reputation.

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