TM LEWIS & SON LIMITED

Executive Summary

TM Lewis & Son Limited exhibits strong financial health with growing equity, positive working capital, and adequate liquidity, indicating robust operational performance. Attention to improving debtor collection and clearing the director’s overdrawn account will further strengthen cash flow and financial stability. With prudent management, the company is well-positioned for sustainable growth in the maintenance and repair sector.

TM LEWIS & SON LIMITED - Analysis Report

Company Number: 14379252

Analysis Date: 2025-07-29 16:06 UTC

Financial Health Assessment: TM Lewis & Son Limited (Year ending 30 September 2024)

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1. Financial Health Score: B

Explanation:
TM Lewis & Son Limited demonstrates solid financial footing with positive net assets and growth in working capital year-on-year. The company maintains a healthy cash balance and manageable current liabilities, indicating stable liquidity. However, some caution is warranted due to an overdrawn director’s account and relatively concentrated ownership, which may pose governance risks. Overall, the financial indicators suggest good health but with room for improvement in operational cash management and diversification.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Net Current Assets (Working Capital)	39,946	Strong positive working capital, indicating the company can cover short-term liabilities comfortably.
Net Assets (Equity)	47,446	Positive and increasing equity, reflecting retained profitability and asset growth.
Cash Balance	14,741	Adequate cash reserves provide liquidity for day-to-day operations, though slightly decreased from previous year.
Debtors (Trade Receivables)	39,870	Significant increase in trade debtors; may suggest rising sales but also potential collection risk if not monitored.
Current Liabilities	14,665	Stable level of liabilities due within the year, well covered by current assets.
Director’s Overdrawn Account	(9,520)	Indicates temporary internal financing via the director; to be cleared within 9 months, but highlights cash flow management area.
Tangible Fixed Assets (Net)	7,500	Investment in plant and machinery suggests ongoing commitment to operational capacity.
Employee Count	2	Small, focused team typical for the company’s size and sector.

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3. Diagnosis: What the Financial Data Reveals

• Healthy Cash Flow and Liquidity: The company’s positive net current assets and cash position are vital signs of a healthy financial system, analogous to a patient with strong heart and lung function. This liquidity allows the company to meet its short-term obligations without strain.

• Growth in Equity and Retained Earnings: The increase in shareholders’ funds from £22,624 in 2023 to £47,446 in 2024 signals profitable operations and prudent financial management. This accumulation of retained earnings reflects resilience and capacity to reinvest in the business.

• Rising Trade Debtors – Potential Symptom of Stress: The large jump in debtors from £21,970 to £39,870 suggests that while sales or services might be increasing, cash inflows could be delayed. This symptom requires monitoring, as prolonged debtor days can strain liquidity, akin to a buildup of toxins in the bloodstream.

• Director’s Account Overdrawn – Temporary Internal Financing: The overdrawn director’s account (£9,520) is like a compensatory mechanism where the director has injected personal funds or absorbed expenses. Though not unusual in small companies, reliance on this should be temporary and cleared promptly to avoid financial imbalance.

• No Long-Term Debt: The removal of bank loans (previously £988) improves the company’s debt profile, reducing financial risk and interest obligations, contributing to a healthier balance sheet.

• Small Workforce: With only two employees, the company operates a lean structure, which can be efficient but may also limit scalability or resilience to staff absences.

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4. Recommendations for Financial Wellness Improvement

• Enhance Debtor Management: Implement stricter credit control and more frequent monitoring of receivables to reduce the risk of bad debts and improve cash inflows. Consider setting clear payment terms and follow-up procedures.

• Clear Director’s Overdrawn Account Promptly: Ensure the director’s overdrawn balance is settled within the agreed 9 months to prevent liquidity strain and maintain transparent financial practices.

• Maintain Cash Reserves: Although current cash levels are adequate, aim to build a buffer that can withstand unexpected expenses or delays in receivables, ensuring a “healthy bloodstream” of cash flow.

• Diversify Ownership and Strengthen Governance: While having a single controlling shareholder can simplify decision-making, consider formalizing governance structures and documenting policies to mitigate risks associated with concentrated control.

• Plan for Growth and Scalability: Evaluate opportunities for incremental staff additions or operational improvements to support business expansion and reduce reliance on a very small team.

• Regular Financial Monitoring: Continue to prepare timely financial statements and review key metrics regularly to detect early “symptoms” of distress and respond proactively.

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