URBAN JOINERY LTD

Executive Summary

Urban Joinery Ltd is currently stable with improving liquidity but shows signs of financial stress due to rising liabilities and a thin equity base. The company demonstrates positive working capital and asset stability but must manage debt carefully to avoid cash flow strain. Strengthening equity and proactive liability management are key to improving financial health and ensuring sustainable growth.

URBAN JOINERY LTD - Analysis Report

Company Number: 13638274

Analysis Date: 2025-07-29 13:53 UTC

Financial Health Assessment: URBAN JOINERY LTD (as of 30 September 2024)

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1. Financial Health Score: C

Explanation:
Urban Joinery Ltd exhibits some areas of strength such as increasing current assets and positive net current assets, but also shows signs of financial strain due to rising liabilities and very thin net asset base. The score "C" reflects a company that is stable but with symptoms indicating cautious monitoring and proactive management is necessary to avoid potential distress.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	22,966	Stable investment in long-term assets.
Current Assets	58,817	Healthy increase from prior year; good liquidity potential.
Current Liabilities	41,376	Significant rise, indicating increased short-term obligations.
Net Current Assets (Working Capital)	17,441	Positive and growing working capital; "healthy pulse" for short-term financial operations.
Total Assets Less Current Liabilities	40,407	Shows buffer before long-term debts considered.
Creditors Due After One Year	32,283	Long-term liabilities have increased, "chronic condition" needing attention.
Net Assets (Shareholders’ Funds)	8,124	Very low equity base, indicating thin margin of safety for creditors and owners.
Average Employees	3	Small workforce consistent with micro-entity status.

Additional Observations:

• The company’s net assets decreased sharply from £26,819 in 2021 to just £8,124 in 2024, primarily due to increasing liabilities.
• Current assets almost doubled in the last year, which is a positive sign of liquidity improvement, but current liabilities also nearly doubled, which tempers this optimism.
• The company remains a micro-entity, with limited filing requirements, which may reduce transparency but fits its current size and scale.

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3. Diagnosis: What the Financial Data Reveals

Urban Joinery Ltd shows symptoms of financial strain despite maintaining positive working capital. The company’s liquidity position improved markedly in the latest year, indicating a "healthy cash flow" from operations or better management of receivables and stock. However, the substantial increase in current and long-term liabilities signals growing financial obligations that are eating into the company’s net worth. The net assets (equity) have diminished significantly over the last three years, suggesting the business is operating on a thin financial cushion.

This thin equity base can be likened to a patient with low immunity—while currently stable, the company is vulnerable to adverse events such as a drop in sales, delayed payments, or unexpected expenses. The rising liabilities (both short and long term) could pressure cash flows if not managed carefully, and the company should be wary of overreliance on debt financing.

The small but growing workforce and the nature of the joinery installation business indicate a hands-on, service-driven operation. This is a sector where maintaining good client relationships and managing project cash flows tightly is crucial.

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4. Recommendations: Specific Actions to Improve Financial Wellness

1. Strengthen Equity Base:
   Consider retaining more profits or injecting additional capital to build a stronger net asset base. This "strengthens the immune system" of the company against financial shocks.

2. Manage Liabilities Proactively:
   Review and renegotiate terms of both short-term and long-term creditors to reduce the pressure of repayments. Stretching out debt maturities or securing more favourable credit terms can ease "financial breathing."

3. Maintain Healthy Cash Flow:
   Continue improving receivables collection and inventory turnover. Consider implementing tighter credit control policies to reduce the risk of cash flow "arrhythmias."

4. Monitor Financial Ratios Regularly:
   Track liquidity ratios (e.g., current ratio), gearing ratios (debt to equity), and profitability to detect early signs of distress.

5. Plan for Growth Carefully:
   With only three employees and a micro-entity structure, growth should be scaled prudently to avoid overextension of resources and cash flow stress.

6. Engage Professional Advice:
   If not already done, consulting with financial advisors or accountants can help in planning tax-efficient strategies and optimizing financial structure.

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