Company Number: 13262405

Analysis Date: 2025-07-29 15:33 UTC

Financial Health Assessment Report for PSD Electrical Services Ltd

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1. Financial Health Score: C (Fair)

Explanation:
PSD Electrical Services Ltd displays a moderate financial position typical of a small micro-entity company in an early stage of development. While the company shows positive net assets and working capital, there is a noticeable decline in key balance sheet metrics over the past year, suggesting emerging symptoms of financial strain. The overall outlook is cautious but manageable if corrective action is taken.

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2. Key Vital Signs (Critical Metrics)

Metric	2025 (£)	2024 (£)	Trend	Interpretation
Fixed Assets	2,330	2,979	↓ Decreasing	Slight reduction in long-term asset base, possibly asset disposals or depreciation.
Current Assets	12,389	17,055	↓ Decreasing	Decline in liquid and short-term assets; could signal reducing cash or receivables.
Current Liabilities	5,547	3,741	↑ Increasing	Rising short-term debts may pressure liquidity.
Net Current Assets (Working Capital)	6,842	13,314	↓ Sharply	Working capital halved, indicating reduced buffer for day-to-day operations.
Net Assets (Equity)	8,571	15,853	↓ Decreasing	Shareholders’ funds nearly halved, a sign of reduced financial strength.
Share Capital	100	100	Stable	Minimal paid-up capital, typical for micro-entities.
Number of Employees	1	1	Stable	Stable staffing level consistent with small scale.

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3. Diagnosis: Underlying Business Health

• Healthy Signs:

  • The company maintains positive net assets and working capital, meaning it is solvent and can meet short-term obligations.
  • No overdue filings or penalties, indicating good compliance and governance.
  • Stable staffing and business focus in electrical installation (SIC 43210).

• Symptoms of Distress:

  • The sharp decline in current assets and net assets over the last year reflects a reduction in available liquidity and overall financial cushion.
  • Increasing current liabilities relative to current assets signals tightening liquidity, which may constrain operational flexibility.
  • Decreasing fixed assets could mean the company is not investing in long-term growth or is disposing of assets to manage cash flow.
  • The equity base has diminished substantially, suggesting profitability challenges or distributions exceeding retained earnings.

• Potential Causes:

  • Market or operational pressures impacting revenue or margins.
  • Increased short-term borrowing or delayed collection of receivables.
  • Insufficient reinvestment into assets or business expansion.

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4. Prognosis: Future Financial Outlook

If current trends continue without intervention, PSD Electrical Services Ltd may face increasing liquidity stress and a further decline in net assets, which could limit growth opportunities and risk solvency issues in the medium term. However, the company’s current positive equity and net current assets provide a runway to implement corrective measures.

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5. Recommendations for Financial Wellness Improvement

• Strengthen Liquidity:

  • Tighten credit control to accelerate debtor collections and improve cash inflows.
  • Negotiate extended payment terms with suppliers to ease short-term cash outflows.
  • Consider short-term financing options prudently to bolster working capital if needed.

• Cost Management:

  • Review operational expenses to identify and cut non-essential costs.
  • Maintain lean staffing but ensure capacity matches workload to avoid revenue loss.

• Asset Management:

  • Evaluate fixed assets to ensure they contribute to revenue generation; consider reinvesting in key equipment if needed.
  • Avoid unnecessary asset disposals that may impair operational capabilities.

• Profitability Focus:

  • Analyze profit margins closely; adjust pricing or service mix to improve profitability.
  • Explore new customer segments or value-added services within electrical installation.

• Financial Monitoring:

  • Implement monthly financial reviews to detect early warning signs.
  • Engage with an accountant or financial advisor regularly for strategic guidance.

• Compliance:

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

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Executive Summary