VELON SERVICE LTD

Executive Summary

VELON SERVICE LTD shows strong financial health with growing equity and solid working capital, reflecting a business on a stable growth trajectory. However, the significant increase in receivables warrants close management to maintain healthy cash flow. With prudent debtor management and ongoing financial monitoring, the company is well-positioned for sustainable development in its building projects sector.

VELON SERVICE LTD - Analysis Report

Company Number: 14528329

Analysis Date: 2025-07-29 18:02 UTC

Financial Health Assessment Report for VELON SERVICE LTD

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1. Financial Health Score: A-

Explanation:
VELON SERVICE LTD demonstrates strong financial health for a company incorporated recently (Dec 2022). It has shown significant growth in net assets and working capital over two years, indicating healthy financial management and operational stability. The A- grade reflects a robust liquidity position and solid equity base, with room for continued monitoring as the company matures.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Net Assets (Equity)	£15,778	Growing equity signals retained earnings and business value increase. Healthy capital base.
Net Current Assets	£15,366	Strong positive working capital ("healthy cash flow") ensures operational liquidity.
Cash at Bank	£2,542	Sufficient cash to cover short-term obligations but lower than previous year - monitor cash flow closely.
Debtors	£15,206	Significant receivables - potential risk if not collected timely; indicates sales on credit.
Current Liabilities	£2,382	Manageable short-term debts, well covered by current assets.
Fixed Assets	£412	Minimal investment in tangible assets, typical for a service-oriented or project development company.
Share Capital	£100	Small capital injection consistent with company size and recent formation.
Profit & Loss Reserve	£15,678	Indicates accumulated profits retained in the business, a positive sign of profitability or capital growth.

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3. Diagnosis

VELON SERVICE LTD presents the "vital signs" of a financially sound young company with strong liquidity and growing equity. The substantial increase in net current assets from £5,212 in 2023 to £15,366 in 2024 reflects improved operational health and working capital management—akin to a patient showing improved vital signs after treatment.

The company’s cash balance has decreased from £5,135 to £2,542, while debtors have increased significantly from £1,646 to £15,206. This symptom suggests that while sales or project work has expanded (increasing receivables), cash collection cycles may be lengthening, which requires attention to avoid liquidity strain.

Fixed assets remain low, which aligns with the company's development of building projects activity, where investment might be more in project costs rather than physical assets owned by the company.

Overall, the financial data reveals a company with a strong equity base, good working capital, and profitability, but with a symptom of increasing receivables that should be monitored to prevent cash flow issues.

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4. Recommendations

• Strengthen Cash Flow Management: Accelerate debtor collections to convert receivables into cash more quickly. Consider tighter credit control policies or incentives for early payment to alleviate pressure on cash reserves.

• Maintain Working Capital Vigilance: Continue monitoring the balance between current assets and liabilities to ensure operational liquidity remains strong, especially as the company scales.

• Plan Asset Investment Strategically: Assess the need for tangible assets carefully in line with project requirements to avoid unnecessary capital tie-up.

• Profit Retention vs. Distribution: Given the healthy profit and loss reserve, consider reinvesting profits to support growth or paying dividends if appropriate, balancing reinvestment for future development with shareholder returns.

• Regular Financial Reviews: As a young company, establish regular financial health check-ups to identify any emerging symptoms of distress early, especially around credit risk and cash flow.

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