T J MAKERS LTD

Executive Summary

T J MAKERS LTD has shown encouraging signs of financial recovery, moving from a severe deficit to a positive net asset position within one year. However, the company remains financially fragile with minimal equity and limited liquidity buffers. Focused efforts on strengthening cash flow, profitability, and capital reserves will be critical to sustaining and improving financial health.

T J MAKERS LTD - Analysis Report

Company Number: 14361720

Analysis Date: 2025-07-20 16:06 UTC

Financial Health Assessment for T J MAKERS LTD as of 30 September 2024

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1. Financial Health Score: C

Explanation:
T J MAKERS LTD shows signs of recovery but remains in a fragile state financially. The company improved from a significant net liability position in 2023 to a modest positive net asset position in 2024. However, key liquidity and capital buffers remain thin, indicating vulnerability to financial stress. This score reflects a company that is stabilizing but not yet firmly healthy.

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2. Key Vital Signs

Metric	30-Sep-2024	30-Sep-2023	Interpretation
Current Assets	£1,606	£2	Cash and receivables increased, aiding liquidity but still low.
Current Liabilities	£1,042	£2,944	Short-term debts reduced significantly, improving working capital.
Net Current Assets	£564	-£2,942	Positive working capital indicates ability to cover short-term debts.
Net Assets	£265	-£3,241	Equity turned positive, but still very low, indicating weak capital base.
Average Employees	2	2	Small workforce, typical for a micro-entity, but limits operational capacity.

Interpretation:

• Liquidity ("healthy cash flow"): The company’s current assets now exceed current liabilities, a critical improvement indicating short-term financial obligations can be met without distress. This is a vital sign of recovery from previous liquidity strain.
• Capital Structure ("strength of the skeleton"): The net assets turned positive but remain minimal (£265). This thin equity buffer means the company remains vulnerable to unexpected losses or cash flow shocks.
• Size and Scale: As a micro-entity with 2 employees, T J MAKERS LTD operates on a very small scale, which limits financial flexibility.

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3. Diagnosis: Business Financial Health Overview

• Symptoms of Distress Previously Present:
  In 2023, the company exhibited clear financial distress with net current liabilities of nearly £3,000 and an overall negative net asset position exceeding £3,200. This indicated an inability to cover short-term debts and a capital deficit, akin to a patient with dangerously low vital signs.

• Signs of Recovery:
  By 2024, current liabilities were reduced substantially, and current assets increased, resulting in positive working capital and net assets. This suggests management has taken steps to stabilize the company’s finances, possibly through better cash management or reduction of short-term debts.

• Underlying Weakness:
  Despite improvements, the equity base remains very low, suggesting the company is still susceptible to financial shocks or operational setbacks. The micro scale of the business and limited resources constrain growth potential and resilience.

• Operational Note:
  The company operates in "Manufacture of other builders' carpentry and joinery" (SIC 16230), a niche requiring skilled labor and materials management. The small team (2 employees) reflects a lean operation but limits capacity to scale quickly or absorb operational disruptions.

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4. Recommendations: Steps to Improve Financial Wellness

• Strengthen Cash Reserves:
  Preserve and build cash or liquid assets to create a buffer against unexpected expenses or downturns. Consider negotiating better payment terms with clients and suppliers to improve cash flow timing.

• Enhance Profitability and Margins:
  Review pricing, cost control, and operational efficiency to improve net profit margins. Even small improvements in profitability can significantly strengthen the equity base over time.

• Monitor and Manage Liabilities:
  Continue reducing short-term liabilities and avoid accumulating new debts unless necessary. Proactively manage creditors and accruals to prevent liquidity strain.

• Consider Capital Injection:
  If feasible, the shareholders might inject additional capital or retain earnings rather than distribute profits to build a stronger equity cushion.

• Plan for Growth Prudently:
  With limited staff and resources, growth should be carefully managed to avoid overextension. Explore partnerships or subcontracting to increase capacity without large fixed costs.

• Maintain Compliance and Timely Reporting:
  The company is current with accounts and confirmation statements, which supports credibility with banks, suppliers, and stakeholders.

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