Company Number: 13526426

Analysis Date: 2025-07-20 15:38 UTC

Financial Health Assessment for TAYLOR MADE BOILERS & BATHROOMS LTD

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress due to persistent negative working capital (net current liabilities), very low net assets, and increasing creditor balances. While it remains active and solvent for now, these symptoms suggest liquidity strain and potential difficulties in meeting short-term obligations without corrective actions.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	35,477	5,495	Healthy increase, driven by inventory growth and higher debtors.
Cash	4,754	3,575	Cash balance improved slightly but remains modest.
Debtors	18,958	1,920	Large increase; potential slow collection or credit risk.
Current Liabilities	53,372	14,762	Sharp rise; indicates more short-term debts, possibly trade creditors, accruals, and finance leases.
Net Current Assets (Working Capital)	-17,895	-9,267	Negative and worsening; a critical symptom of liquidity stress.
Net Assets (Equity)	373	979	Very low; shrinking equity base reduces financial cushion.
Provisions for Liabilities (Deferred Tax)	(4,285)	(2,403)	Increasing deferred tax liability; note for future cash tax outflows.
Fixed Assets (Tangible)	22,553	12,649	Increasing fixed assets, suggesting investment or growth.
Loans to Directors	12,759	(2,785)	Changing balances indicate movement, but currently a receivable from directors.

Interpretation of Vital Signs:

• Negative Working Capital ("symptom of distress"): The company has more short-term liabilities than short-term assets, which can strain daily operations and cash flow.
• Increasing Trade Creditors and Accruals: Creditors nearly quadrupled, and accruals surged, potentially indicating delayed payments or increased obligations.
• Rising Debtors: Sharp increase in amounts owed by customers may indicate relaxed credit terms or collection issues, affecting liquidity.
• Low Equity Base ("thin financial pulse"): Net assets dropped significantly, meaning the company has a very thin equity buffer to absorb losses or shocks.
• Investment in Fixed Assets: The company is investing in property, plant, and equipment, which may be positive for capacity but can tie up cash.
• Deferred Tax Liability: Increasing deferred tax means future tax payments may be required, which is something to plan for.

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3. Diagnosis

Taylor Made Boilers & Bathrooms Ltd is currently experiencing liquidity challenges, as evidenced by its persistent and worsening negative working capital. The company’s cash reserves are modest, and the build-up of short-term liabilities relative to current assets signals a "strained circulatory system" financially. While the company is investing in fixed assets, which could be a sign of growth or preparing for increased operations, this investment appears to be consuming resources that could otherwise support working capital.

The rising debtors and creditors suggest a mismatch in timing of cash inflows and outflows, which is a common "cash flow irregularity" symptom. The low net asset value and declining shareholders' funds indicate a shrinking "financial immune system," reducing its ability to absorb adverse financial shocks.

Given these symptoms, the company’s financial health is fragile and requires intervention to avoid worsening distress or potential solvency issues.

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4. Recommendations

Immediate Actions:

• Improve Cash Flow Management: Tighten credit control to reduce debtor days and accelerate collections. Review payment terms with suppliers to possibly extend payment periods without damaging relationships.
• Working Capital Optimization: Manage inventory levels carefully to avoid excess stock tying up cash. Consider negotiating with creditors to restructure short-term debts.
• Monitor and Control Expenses: Review operating costs to improve profitability and reduce cash burn. Avoid unnecessary capital expenditures until working capital improves.

Medium to Long Term Actions:

• Strengthen Equity Base: If possible, consider capital injection by shareholders or external investors to bolster net assets and improve financial stability.
• Debt Management: Explore refinancing options for short-term liabilities into longer-term debts to alleviate immediate liquidity pressure.
• Financial Planning: Implement robust budgeting and forecasting to anticipate cash flow needs and avoid future liquidity crises.
• Operational Efficiency: Continue investing wisely in fixed assets but ensure these investments support profitable growth and do not exacerbate cash flow problems.

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