ROSE ELECTRICAL LIMITED
Company number 04472660 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Commercial Credit Assessment: ROSE ELECTRICAL LIMITED
1. Credit Opinion: CONDITIONAL
Reasoning: Rose Electrical is a long-established (2002) electrical installation business with a thin but improving capital base. The most recent year shows a materially strengthened cash position (£48,545 vs £1,084 in 2024), and the director has repaid a significant loan (£32,565). However, the balance sheet remains small in absolute terms (£24,614 net assets), creditors have increased substantially (from £33,235 to £53,409), and the income statement is abridged, meaning profitability cannot be directly verified. The company warrants modest credit facilities but with appropriate limits and monitoring. Larger exposures would require additional security or guarantees.
2. Financial Strength
Balance Sheet Trend – Improving but Fragile
| Metric | 2025 | 2024 | 2023 | 2020 | 2016 |
|---|---|---|---|---|---|
| Net Assets | £24,614 | £25,849 | £41,289 | £68 | £869 |
| Cash | £48,545 | £1,084 | £58,775 | £13,210 | £11,109 |
| Total Assets | £71,864 | £51,290 | £100,701 | £28,516 | £18,077 |
- Positive trajectory: Net assets have grown from near-zero (£68 in 2020) to £24,614, demonstrating accumulated profitability over time. Shareholders' funds now represent a meaningful capital cushion.
- Absolute scale remains very small: A £24,614 equity base provides limited capacity to absorb losses or fund working capital without external support. Any single bad debt or contractual dispute could materially impair the balance sheet.
- Tangible fixed assets of £7,604 (motor vehicles and equipment) offer minimal collateral value. The asset base is predominantly working capital (debtors + cash).
- Provisions of £1,445 (likely deferred tax or similar) are modest and declining.
Capital Structure: The company is entirely equity-funded with no visible long-term debt. Share capital is nominal at £5. The business has been built organically through retained earnings, which speaks to conservative financial management but also limits growth capacity.
3. Cash Flow Assessment
Liquidity – Currently Adequate but Volatile
| Metric | 2025 | 2024 |
|---|---|---|
| Current Assets | £71,864 | £51,290 |
| Current Liabilities | £53,409 | £33,235 |
| Net Current Assets | £18,455 | £18,055 |
| Current Ratio | 1.35x | 1.54x |
- Current ratio of 1.35x is adequate for a small trade contractor but represents a deterioration from 1.54x, driven by a 60% increase in creditors (£33,235 → £53,409). This creditor growth warrants scrutiny – it may reflect normal trading dynamics or potential strain on payment timelines.
- Cash has improved dramatically to £48,545 from just £1,084, which is reassuring for short-term liquidity. However, cash has been highly volatile historically (£58,775 in 2023, £1,084 in 2024), suggesting lumpy contract receipts or seasonal working capital demands typical of the construction/electrical trade sector.
- Debtors have halved from £49,911 to £22,994, which could indicate either improved collections or reduced revenue activity. Without turnover data, this is difficult to assess definitively.
Working Capital Concern: The creditor balance (£53,409) now exceeds net current assets (£18,455) by a significant margin. While the cash position provides immediate coverage, the business has limited headroom if trade creditors demand accelerated payment or if a major debtor defaults.
Director Loan Account: The director (S J Rose) repaid £35,851 during the year, converting from a debtor balance of £32,565 owed to the company to a creditor balance of £3,286 owed by the company. This repayment is a positive signal of management's commitment to the business, but the intermingling of personal and business finances is a characteristic feature that adds complexity to credit analysis.
4. Monitoring Points
| Metric | Rationale | Threshold for Concern |
|---|---|---|
| Cash position | Historical volatility suggests liquidity can compress rapidly | Below £10,000 |
| Trade creditors | 60% increase in 2025 needs explanation; monitor for further escalation | Year-on-year increase exceeding 25% |
| Debtors collection | Halving of debtors could signal revenue decline | Sustained decline over 2+ periods |
| Director loan account | Significant related-party balances can distort true financial position | Outstanding balance exceeding £20,000 |
| Filing compliance | Accounts and confirmation statements are currently up to date | Any overdue filings |
| Net assets trend | Core indicator of business viability | Sustained decline below £15,000 |
| Provisions | Monitor for any material increase suggesting contingent liabilities | Increase exceeding 50% |
Additional Recommendations: - Request management accounts or turnover data to assess trading profitability, as abridged accounts obscure the P&L - Clarify the nature of the £53,409 creditor balance – how much is trade creditors vs HMRC vs other? - Understand the business pipeline and contract book to assess forward revenue visibility - Consider personal guarantees from the Rose family for any facility exceeding £15,000-£20,000