TOMMY'S TYRES MOBILE LTD

Executive Summary

Tommy's Tyres Mobile Ltd is a newly established small enterprise showing foundational strength with fixed assets and positive net assets. However, the negative working capital signals liquidity pressure that requires careful cash flow management. With prudent financial controls and possibly additional capital, the company can improve its financial resilience and support future growth.

TOMMY'S TYRES MOBILE LTD - Analysis Report

Company Number: 15164134

Analysis Date: 2025-07-20 18:45 UTC

Financial Health Assessment: TOMMY'S TYRES MOBILE LTD (Year ended 30 September 2024)

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1. Financial Health Score: C

Explanation:
This company is in its first year of trading and shows some typical early-stage characteristics. It has a small capital base and a modest asset base, but the net current liabilities (negative working capital) signal liquidity pressure. The financial "vital signs" suggest caution but not immediate distress — hence a mid-level grade reflecting a startup phase with risks to monitor.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	6,920	Investment in equipment and vehicles, typical for this industry; tangible assets provide business foundation.
Current Assets	10,028	Includes cash (£7,028) and debtors (£3,000). Cash is the "pulse" of daily operations—adequate but limited.
Current Liabilities	14,529	Obligations due within one year exceed current assets, indicating a "symptom of liquidity stress."
Net Current Assets (Working Capital)	-4,501	Negative working capital means the company may struggle to meet short-term debts without additional cash inflows.
Net Assets (Equity)	2,419	Positive but low equity, reflecting initial capital investment and retained earnings; this is the "body’s structural strength."
Share Capital	1	Minimal share capital, typical for new private limited companies.
Employees	1	Sole director also the only employee, indicating a small, tightly controlled operation.

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3. Diagnosis

The company’s financial condition resembles a patient in the early stages of treatment — it shows the foundational building blocks (fixed assets and initial equity) but also early signs of stress (negative working capital). The negative net current assets suggest the company is relying on short-term credit or trade terms to finance its operations, which could be risky if sales or collections slow down.

The cash balance (£7,028) offers some breathing room, but tight liquidity means the company must carefully manage cash inflows and outflows. The company has no audit requirement due to its small size, and all filings are up to date, indicating compliance with statutory requirements.

Overall, the company is not in distress but is vulnerable to cash flow shocks. The single director has full control and responsibility, so decisions can be agile but also bear concentration risk.

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4. Recommendations

1. Improve Working Capital Management:

   • Negotiate better payment terms with suppliers to extend credit duration.
   • Accelerate collection of receivables.
   • Monitor cash flow closely to avoid liquidity crunches.

2. Build Cash Reserves:

   • Aim to increase cash holdings through prudent budgeting and possibly short-term financing if needed. Healthy "cash flow" is critical for operational stability.

3. Financial Planning and Forecasting:

   • Prepare monthly cash flow forecasts to anticipate funding needs.
   • Set realistic sales targets aligned with capacity to avoid overextension.

4. Consider Capital Injection:

   • Additional share capital or shareholder loans could improve equity and provide a buffer against liabilities.

5. Monitor Fixed Asset Utilization:

   • Ensure that the tangible assets (vehicles and equipment) are effectively contributing to revenue generation.

6. Risk Management:

   • Prepare contingency plans for unexpected expenses or delays in payments.

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