SPARK POINT ELECTRICS LTD

Executive Summary

SPARK POINT ELECTRICS LTD is a newly established micro company showing early financial distress with negative net assets and working capital deficit. Immediate focus on liquidity management and capital injection is essential to stabilize operations. With careful financial discipline and growth initiatives, the company can improve its financial health and build a sustainable business foundation.

SPARK POINT ELECTRICS LTD - Analysis Report

Company Number: 14682645

Analysis Date: 2025-07-29 16:50 UTC

Financial Health Assessment for SPARK POINT ELECTRICS LTD

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1. Financial Health Score: D

Explanation:
SPARK POINT ELECTRICS LTD exhibits several symptoms of financial distress, particularly a negative net asset position and working capital deficit. As a newly incorporated micro company, it has yet to establish a strong financial foundation. The "D" grade reflects significant room for improvement to reach sustainable financial health.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	1,200	Minimal investment in long-term assets, typical for a startup.
Current Assets	137	Very low liquid assets, indicating limited cash or receivables.
Current Liabilities	1,746	Debts and payables due within one year exceed current assets.
Net Current Assets (Working Capital)	-1,609	Negative working capital, a critical warning sign (symptom of liquidity strain).
Total Assets Less Current Liabilities	-409	Company owes more than it owns after short-term obligations.
Net Assets (Shareholders' Funds)	-809	Negative equity indicates accumulated losses or undercapitalization.
Number of Employees	1	Very small operation, consistent with micro company category.

Interpretation:

• The negative working capital suggests the company may struggle to meet short-term obligations without additional financing or cash inflows.
• The negative net assets (shareholders' funds) indicate the company has more liabilities than assets, a serious symptom of financial distress often seen in early-stage companies with initial losses or underfunding.
• The minimal fixed assets and current assets reflect the company's early stage and low operational scale.

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3. Diagnosis

SPARK POINT ELECTRICS LTD is in its infancy, having been incorporated in February 2023 and filing its first accounts for the year ending February 2024. The financial "vital signs" suggest the company is experiencing early-stage financial strain:

• Liquidity Stress: The negative working capital (-£1,609) signals that current liabilities outpace current assets, indicating potential cash flow issues. Without adequate cash or near-cash assets, the company may find it challenging to pay suppliers or meet other short-term commitments promptly.
• Capital Deficiency: Negative shareholders' funds (-£809) imply that the company has incurred losses or that initial capital injection was insufficient to cover liabilities. This is common in startups but must be addressed to avoid insolvency risk.
• Operational Scale: The business operates with one employee (likely the director), with minimal fixed assets. This is typical for a micro-entity in the electrical installation sector just starting operations.
• No Audit: The accounts were prepared under micro-entity reporting standards without audit, so detailed profit and loss data is unavailable. This limits insight into operational profitability but generally signals a very small-scale operation.

In medical terms, the company shows early symptoms of financial distress, akin to a patient with low blood pressure (working capital deficit) and depleted nutrients (negative equity). Immediate care is needed to stabilize the condition.

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4. Recommendations

1. Improve Liquidity Management:

   • Enhance cash inflows by accelerating receivables collection and managing payables prudently.
   • Consider short-term financing options (e.g., overdraft, invoice factoring) to cover working capital gaps temporarily.

2. Inject Additional Capital:

   • The shareholder (Mr. Adem Arif) or other investors should consider injecting fresh equity or director loans to strengthen the capital base and eliminate negative net assets.

3. Cost Control and Revenue Growth:

   • Focus on increasing turnover through targeted marketing and securing contracts in the electrical installation sector.
   • Keep overheads minimal to prevent worsening losses.

4. Regular Financial Monitoring:

   • Implement monthly cash flow forecasts and financial reviews to detect warning signs early and adjust operations accordingly.

5. Plan for Longer-Term Stability:

   • As the business grows, transition from micro-entity reporting to more detailed financial controls to improve transparency and attract potential investors or lenders.

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