R&M DRYWALL CONTRACTS LTD

Executive Summary

R&M DRYWALL CONTRACTS LTD shows early financial stability with positive net assets and working capital, but very low cash balances and reliance on director loans highlight liquidity challenges typical for a new business. Strengthening cash reserves and formalizing funding arrangements will be crucial for sustainable growth in this capital-intensive sector.

R&M DRYWALL CONTRACTS LTD - Analysis Report

Company Number: 15111862

Analysis Date: 2025-07-20 15:47 UTC

Financial Health Assessment Report for R&M DRYWALL CONTRACTS LTD

---

1. Financial Health Score: B-

Explanation:
The company, being newly incorporated in September 2023, shows early signs of financial stability with positive net assets and working capital. However, the minimal cash balance and director loans on the balance sheet indicate some initial financial strain or reliance on internal funding. Given the company's infancy and small scale, the score reflects a cautiously positive outlook with room for improvement in liquidity management.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Cash at bank	59	Very low cash on hand, indicating limited liquid resources to cover immediate expenses ("weak pulse").
Current Liabilities	(2,393)	Negative figure here represents net liabilities of £2,393, mostly comprising director loans and accruals.
Net Current Assets	2,452	Positive working capital suggests the company can cover short-term obligations, a "healthy blood pressure" sign.
Net Assets / Shareholders’ Funds	2,452	Positive net worth indicates the company is solvent at this early stage, "good heart function".
Called-up Share Capital	100	Minimal capital invested by shareholders, typical for a micro entity.
Average Employees	1	Very small workforce consistent with a micro business profile.

---

3. Diagnosis: Financial Condition Overview

• Liquidity & Cash Flow: The extremely low cash balance (£59) signals a "weak pulse" in immediate liquidity. However, the company shows positive net current assets (£2,452), largely due to the classification of director loans as negative current liabilities (a loan owed to the company by the director is effectively an asset, but here it appears as a liability, possibly a loan from the director to the company). This suggests that while cash is scarce, the company has sufficient short-term net resources to meet obligations.

• Capital Structure & Solvency: Shareholders’ funds of £2,452 indicate the company has a positive equity base, essential for long-term survival. The small capital injection (£100) and the majority of equity residing in retained profits show an early-stage business retaining earnings or reflecting initial small profits.

• Dependence on Director Funding: The director loan balance of £3,665 is a notable "symptom of reliance" on internal funding rather than external debt or operational cash flow. This can be acceptable in start-ups but may pose risks if not managed prudently.

• Business Activity & Scale: The company is classified under SIC code 41201 (Construction of commercial buildings), a sector typically requiring significant upfront capital and cash flow management. With only one employee and small financial scale, the company is in a nascent phase, akin to a patient recently admitted and stabilizing.

---

4. Recommendations: Path to Financial Wellness

• Improve Cash Reserves: Prioritize building a healthy cash buffer to ensure operational flexibility. This might involve accelerating receivables, managing payables, or securing working capital facilities.

• Clarify Director Loan Structure: Review and formalize director loans to ensure transparent accounting and appropriate terms, reducing financial stress and avoiding potential conflicts.

• Monitor Working Capital: Maintain positive net current assets to avoid liquidity crises. Regular cash flow forecasts will help anticipate periods of tight cash.

• Plan for Growth Capital: As the company grows, consider external funding options (bank loans, investor capital) to reduce overreliance on director loans, improving financial stability.

• Maintain Compliance: Continue timely filing of accounts and confirmation statements to avoid penalties and maintain good standing.

• Focus on Profitability: Although early days, aim to generate operational profits to build reserves and reduce dependency on director loans.

---