S&H ELECTRICAL SERVICES LTD

Executive Summary

S&H Electrical Services Ltd shows excellent financial health with strong asset growth and healthy liquidity, reflecting sound operational performance. Monitoring debtor collections and planning for deferred tax liabilities will be key to maintaining this positive trajectory and ensuring continued financial wellness.

S&H ELECTRICAL SERVICES LTD - Analysis Report

Company Number: 13012562

Analysis Date: 2025-07-20 17:27 UTC

Financial Health Assessment Report: S&H Electrical Services Ltd

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1. Financial Health Score: A-

Explanation:
S&H Electrical Services Ltd demonstrates strong and improving financial health indicators, particularly in liquidity and equity growth. The company’s balance sheet reveals a robust net asset base and healthy working capital, which indicates good short-term financial stability. The overall score is an A- reflecting excellent progress but with some caution warranted due to the presence of deferred tax liabilities, which slightly temper the overall strength.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	82,721	Significant investment in long-term assets, showing growth from prior years (2023: £52,888).
Current Assets	229,192	Healthy current assets, primarily driven by cash (£72,316) and debtors (£156,876).
Current Liabilities	108,795	Manageable short-term obligations, well covered by current assets.
Net Current Assets (Working Capital)	120,397	Positive and substantial working capital, indicating the company can comfortably meet short-term debts.
Net Assets	170,999	Strong net asset position, showing a near tripling from 2023 (£63,104), indicating retained earnings growth.
Share Capital	1	Minimal share capital, typical for private limited companies.
Deferred Tax Liability	20,514	Represents timing differences in taxable profits; a normal occurrence but a future cash outflow to monitor.

Additional Notes:

• Debtors have grown significantly, suggesting increased sales or extended credit terms; monitoring debtor collections will be important.
• Cash position is strong and has nearly quadrupled from the previous year, a sign of healthy cash flow and liquidity.
• The company’s equity growth is a very positive sign, indicating profitability and retention of earnings.

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3. Diagnosis: Financial Health Overview

Vital Signs Review:
S&H Electrical Services Ltd exhibits "healthy cash flow" and a "strong balance sheet pulse." The company has effectively managed its assets and liabilities, providing a solid buffer against financial stress. The substantial increase in net assets and working capital over the past year signals operational success and prudent financial management.

Underlying Health Symptoms:

• The large increase in debtors might be a symptom of relaxed credit control or rapidly growing sales; this could pose a liquidity risk if not managed carefully.
• Deferred tax liabilities have increased, which is not uncommon for a growing business but should be planned for in future cash flow forecasts.
• The fixed asset base is growing, indicating investment in equipment or vehicles necessary for electrical installation services, suggesting the company is scaling operations.

Risk Factors:

• Exposure to customer payment delays (debtors) could strain cash flow if not monitored.
• Deferred tax liability indicates future tax payments, requiring cash flow planning.

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4. Recommendations: Path to Improved Financial Wellness

1. Strengthen Debtor Management:
   Implement tighter credit policies and regular monitoring of accounts receivable to ensure prompt collections, maintaining liquidity. Consider offering early payment discounts or enforcing stricter payment terms.

2. Cash Flow Forecasting:
   Develop detailed cash flow forecasts that factor in deferred tax liabilities and expected debtor collections to avoid any liquidity crunches.

3. Asset Utilisation Review:
   Regularly evaluate the productivity of fixed assets to ensure capital investments are generating expected returns and not tying up unnecessary resources.

4. Tax Planning:
   Engage with a tax advisor to optimize tax payments and manage deferred tax liabilities effectively, possibly through timing of capital expenditures or profit recognition.

5. Maintain Strong Equity Base:
   Continue reinvesting profits prudently to sustain growth without over-leveraging, preserving the company’s financial health.

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Medical Analogy Summary

Think of S&H Electrical Services Ltd as a patient with a strong heartbeat and clear lungs—its financial "vital signs" like liquidity and equity are robust, indicating a healthy state. However, the rising "cholesterol" in the form of increasing debtors and deferred tax liabilities should be monitored closely to prevent future "cardiac events" like cash flow problems. With careful management and regular financial check-ups, the company is well poised for a strong recovery and sustained growth.

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