TREE SERVICES LIMITED

Executive Summary

TREE SERVICES LIMITED is a newly formed company showing early-stage financial strain primarily due to negative working capital. While it has a solid asset base and equity foundation, liquidity challenges pose short-term risks. Focused actions to improve cash flow and operational efficiency are essential to stabilize and enhance financial health moving forward.

TREE SERVICES LIMITED - Analysis Report

Company Number: 15297163

Analysis Date: 2025-07-29 19:35 UTC

Financial Health Assessment for TREE SERVICES LIMITED

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1. Financial Health Score: D

Explanation:
The company’s financial health is currently fragile, primarily due to significant working capital deficits and limited operational history. While it shows positive net assets, the negative net current assets indicate short-term liquidity challenges. This score reflects a company in its infancy stage with early symptoms of financial stress that require active monitoring and management.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	71,331	Healthy investment in long-term assets for operational capacity.
Current Assets	29,621	Relatively low current assets, mostly cash or receivables.
Current Liabilities	88,740	High short-term debts due within a year, a concern for liquidity.
Net Current Assets (Working Capital)	-59,119	Negative working capital signals potential cash flow strain.
Total Assets Less Current Liabilities	12,212	Positive but modest net assets indicating some equity buffer.
Shareholders’ Funds	12,212	Entirely funded by owner’s equity, no reported external debt.
Average Employees	2	Small operational scale, typical for micro-entity status.

Vital Sign Interpretation:

• The negative working capital is the most critical symptom, meaning the company may struggle to meet its short-term obligations without additional cash inflows or financing.
• Positive net assets show the company has some cushion, but it is thin and could be quickly eroded by losses or further liabilities.
• The fixed assets base is appropriate for a forestry support services company, indicating sound initial capital investment.
• The company is newly incorporated (Nov 2023), so its financial statements cover a short period (approx. 4 months), limiting trend analysis.

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3. Diagnosis

TREE SERVICES LIMITED is a newly established micro-entity in the forestry support services sector. The balance sheet reveals early signs of liquidity stress marked by a working capital deficit of approximately £59k, which means current liabilities exceed current assets significantly. This is a red flag signaling potential cash flow difficulties, often due to initial setup costs, delayed customer payments, or aggressive credit terms with suppliers.

The positive net assets (£12k) reflect the owner’s equity investment and the initial capital structure. However, limited financial history and the lack of profitability data (no profit and loss reported yet) mean we cannot assess operational efficiency or earnings quality.

The small team of two employees and micro-entity filing status aligns with a business in start-up mode. The director and sole significant shareholder, Mr. Michael Mills, controls 100% of voting rights, indicating centralized decision-making but also increased exposure to individual risk.

Symptoms of distress:

• Negative net current assets imply the company may face difficulties funding day-to-day operations without external support or improved cash conversion cycles.
• Limited cash reserves may restrict the ability to absorb unexpected costs or delays in revenue.
• The company’s newness means it has not yet demonstrated sustainable revenue generation or profit margins.

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4. Recommendations

To improve financial wellness and mitigate risks, TREE SERVICES LIMITED should consider the following:

• Improve Working Capital Management:

  • Accelerate receivables collection and negotiate extended payment terms with suppliers.
  • Monitor cash flow forecasts rigorously to avoid liquidity shortfalls.
  • Consider short-term financing options (overdraft, invoice financing) to bridge gaps.

• Build Cash Reserves:

  • Retain earnings where possible and limit discretionary spending until cash flow stabilizes.
  • Explore equity injections or director loans if necessary to support operational needs.

• Enhance Financial Reporting:

  • Develop detailed budgets and cash flow statements to anticipate and manage financial demands.
  • Regularly review financial KPIs such as current ratio, quick ratio, and cash conversion cycle.

• Operational Efficiency:

  • Review pricing, cost control, and productivity to move towards profitability.
  • Leverage the director’s control to make swift decisions but consider advisory support for finance expertise.

• Strategic Planning:

  • Establish a clear business plan focusing on market penetration and customer acquisition to improve revenue stability.
  • Monitor industry trends in forestry services to adapt quickly.

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Medical Analogy Summary

Think of TREE SERVICES LIMITED as a young patient just out of the womb — it has a strong skeletal frame (fixed assets and equity) but shows signs of acute dehydration (negative working capital) that could lead to more serious health issues if not treated promptly. Early intervention with improved liquidity management and operational care will be critical to ensure this business grows into a robust and financially healthy enterprise.

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