Company Number: 14189383

Analysis Date: 2025-07-29 19:38 UTC

Financial Health Assessment for SCARISBRICK ASSOCIATES LTD (up to 30 Nov 2024)

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1. Financial Health Score: C

• Explanation: The company shows signs of modest financial stability but exhibits symptoms of liquidity strain and shrinking net assets. While not in immediate distress, the reduced working capital and net assets, alongside increasing provisions and liabilities, suggest cautious monitoring and improvement are needed to avoid future cash flow difficulties.

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2. Key Vital Signs (Core Financial Metrics):

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Current Assets	22,373	27,947	Decrease in short-term assets; less buffer.
Cash at Bank & In Hand	14,921	3,138	Healthy cash increase; good short-term liquidity.
Debtors	0	14,376	Debtors fully collected or written off; cash improved.
Stocks (Work in Progress)	7,452	10,433	Reduced stock; possibly better project completion or sales.
Current Liabilities	22,922	27,619	Liabilities reduced but still large relative to assets.
Net Current Assets (Working Capital)	-549	328	Negative working capital now; indicates liquidity stress.
Fixed Assets	923	0	New investment in tangible assets (equipment).
Provisions for Liabilities	199	0	New provision created (deferred tax); potential future cash outflow.
Net Assets / Shareholders' Funds	175	328	Declining net worth; equity being eroded.
Share Capital	100	100	Stable; no new equity raised.

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3. Diagnosis (What the Numbers Reveal):

• Liquidity and Cash Flow:
  The company exhibits a healthy increase in cash reserves, which is a positive sign of improved immediate liquidity. This suggests effective collection of receivables or cash injection during the year. However, the overall current assets have fallen, mainly due to the absence of debtors and a decrease in stocks (work in progress). The negative net current assets (working capital) of £549 is a symptom of liquidity strain—the business has more short-term liabilities than short-term assets, which could hamper day-to-day operations if the cash position worsens.

• Asset Management:
  The addition of tangible fixed assets (£923 net book value) indicates investment in operational capacity or technology, which is generally a healthy sign of business development. However, the reduction in work in progress may reflect completed projects or lower project pipeline, which should be monitored to ensure ongoing revenue generation.

• Profitability and Equity:
  The net assets have declined from £328 to £175, indicating either a loss during the year or dividend distribution exceeding profits. The profit and loss reserve has dropped from £228 to £75, supporting this view. There is no income statement filed, but the reduction in equity is a symptom of erosion in retained earnings or accumulated losses, which could signal profitability challenges.

• Provisions and Taxation:
  The appearance of a £199 deferred tax provision indicates timing differences in tax accounting and signals that some tax liability is expected in the future. This is not necessarily a bad prognosis but is a liability to monitor.

• Operational Health:
  The company remains small with 2 employees and is not overdue on filings, suggesting good compliance and stable governance. The director's report indicates the business operates in quantity surveying—a professional services industry where cash flow management and project completion are key.

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4. Recommendations (Actions to Improve Financial Wellness):

1. Improve Working Capital Management:
   Negative net current assets suggest the company should focus on reducing current liabilities or increasing current assets. This might include negotiating longer payment terms with creditors, accelerating invoicing and collections, or managing stock/work-in-progress more efficiently to release cash.

2. Monitor Profitability Closely:
   The decline in retained earnings suggests potential operating losses or cash extraction. A detailed review of profit margins, cost control, and pricing strategies should be conducted to restore profitability and rebuild equity.

3. Manage Deferred Tax Provisions:
   Understand the nature of the deferred tax provision and plan for future tax payments to avoid cash surprises. Engaging with a tax advisor could optimize tax liabilities and improve cash flow forecasts.

4. Maintain Healthy Cash Reserves:
   The increase in cash is a positive "healthy pulse" for the business. Continue to monitor cash flows closely and maintain a buffer to withstand short-term shocks or delays in project payments.

5. Strategic Investment Review:
   Assess the return on recent fixed asset investments to ensure they contribute positively to revenue growth. Avoid unnecessary capital expenditure if cash flow remains tight.

6. Regular Financial Monitoring:
   Establish monthly or quarterly financial reviews focusing on cash flow forecasts, debtor days, creditor days, and stock turnover to catch early symptoms of distress and act promptly.

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