SRC HOMES LTD

Executive Summary

SRC Homes Ltd is a newly incorporated construction business with a fragile liquidity position characterized by nearly zero working capital and minimal equity. While not currently in critical distress, the company must strengthen cash flow management and profitability to avoid financial strain. Early-stage financial health is weak but with disciplined management and possible funding, future outlook can improve.

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Company Analysis

This analysis is opinion only and should not be interpreted as financial advice.

SRC HOMES LTD - Analysis Report

Company Number: 14470010

Analysis Date: 2025-07-29 14:15 UTC

Financial Health Assessment for SRC Homes Ltd (As of 30 November 2023)


1. Financial Health Score: D

Explanation:
SRC Homes Ltd shows a very thin margin of net current assets (£98), indicating a fragile liquidity position. The company has just started trading (incorporated Nov 2022), with limited financial history. Current liabilities nearly match current assets, which suggests symptoms of financial stress or very tight working capital. Overall, the company’s financial health is currently weak but not critical, reflected by a grade D. The business is in an early stage and requires careful monitoring to ensure survival and growth.


2. Key Vital Signs

Metric Value (£) Interpretation
Current Assets £41,234 Includes stock and cash; moderate level for startup
Cash at Bank £12,984 Limited cash buffer indicating constrained liquidity
Current Liabilities £41,136 High near parity with current assets; risk of cash flow stress
Net Current Assets £98 Almost zero working capital; "symptom of distress" in liquidity
Shareholders’ Funds £98 Equity capital is minimal, indicating limited capitalization
Number of Employees 2 Small team typical of a micro or small business
Account Category Total Exemption Full Small company with simplified filing requirements

3. Diagnosis

The "vital signs" reveal that SRC Homes Ltd is in the very early days of its operating life and is running with extremely tight working capital. The near-zero net current assets (working capital) mean that the company has almost no cushion to cover short-term obligations beyond immediate cash and stock on hand. This can be likened to a patient with dangerously low blood pressure—there’s a risk of collapse if any unexpected expenditure or drop in revenue occurs.

The company holds a moderate level of stock (£28,250), which ties up a significant portion of current assets. The cash position (£12,984) is positive but not robust, restricting flexibility to invest or absorb shocks. Creditors due within one year (£41,136) include trade creditors (£22,431) and tax liabilities (£18,067), indicating that the company must manage payments carefully to avoid liquidity crises.

No income statement was filed, which limits insight into profitability or operational efficiency. The minimal shareholders’ funds (£98) indicate the company is just capitalized enough to meet registration requirements but lacks a meaningful equity buffer.

Overall, the diagnosis points to a "financially fragile" condition typical of a startup company in the construction sector (SIC 41202: Construction of domestic buildings), which often faces cash flow lags due to project-based income.


4. Recommendations

To improve financial wellness and build a healthier financial profile, SRC Homes Ltd should consider the following actions:

  • Improve Working Capital Management:
    Closely monitor inventory turnover and reduce stock levels where possible to free up cash. Negotiate better payment terms with suppliers and customers to smooth cash flow timing.

  • Build Cash Reserves:
    Aim to increase cash reserves to cover at least 3 months of operating expenses. This may require additional equity injection or short-term financing.

  • Enhance Profitability:
    Since no profit/loss data is available, focus on securing profitable contracts and controlling costs. Early profits will strengthen retained earnings and equity.

  • Financial Reporting:
    Prepare and file full accounts including profit and loss statements for improved transparency and to facilitate better financial planning and stakeholder confidence.

  • Regular Financial Monitoring:
    Establish monthly financial reviews to detect warning signs early and adjust business strategy proactively.

  • Explore Funding Options:
    Consider small business loans, overdrafts, or investor capital to support growth and buffer liquidity.


Medical Analogy Summary

SRC Homes Ltd’s financial condition resembles a patient with low blood pressure and minimal reserves—operating on a knife-edge with limited ability to absorb shocks. Immediate attention to "hydration" (cash flow) and "nutrition" (profitability) is essential to avoid financial collapse and promote sustainable growth.



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