WELTON GARDEN SERVICES LIMITED

Executive Summary

Welton Garden Services Limited is showing promising growth in net assets and fixed assets, indicating investment and capital strengthening. However, its persistent negative working capital reveals liquidity challenges that require immediate attention to avoid financial distress. Focused improvements in cash flow management, revenue growth, and cost control are essential for healthier financial stability going forward.

WELTON GARDEN SERVICES LIMITED - Analysis Report

Company Number: 13691573

Analysis Date: 2025-07-20 11:23 UTC

Financial Health Assessment: Welton Garden Services Limited

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1. Financial Health Score: C

Explanation:
Welton Garden Services Limited shows signs of early-stage business development typical of a micro-entity still stabilising its financial footing. The company’s net assets and shareholder funds have grown significantly in the latest year, indicating improving asset management and capital position, but persistent negative working capital signals liquidity challenges. The overall grade 'C' reflects moderate financial health with notable symptoms of distress that require attention.

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2. Key Vital Signs

Metric	Latest Year (2023)	Interpretation
Turnover	Not reported for 2023	No turnover figure available for 2023; 2022 turnover was low (£47,788), indicating modest sales scale.
Fixed Assets	£121,022	Growth from £94,066 indicates investment in tangible assets, potentially equipment or vehicles.
Current Assets	£40,900	Relatively flat, mostly cash and short-term receivables.
Current Liabilities	£79,266	Decreased from £118,413, improvement in short-term debts but still significantly high relative to current assets.
Net Current Assets (Working Capital)	(£34,976)	Negative but improved from (£77,416) in 2022; still a symptom of liquidity strain.
Net Assets (Equity)	£76,616	Substantial increase from £16,650 in 2022, reflecting retained earnings or capital injection.
Creditors due after one year	£9,430	Introduction of longer-term debt could ease short-term pressure but increases total liabilities.
Number of Employees	4	Small workforce consistent with micro-entity status.

Interpretation of Vital Signs:

• The improvement in net assets is a positive sign, akin to a patient gaining strength after illness.
• The persistent negative working capital is a warning symptom of distress—like a patient with low blood pressure indicating potential instability.
• Increasing fixed assets suggest the company is investing in its operational capacity, which could support future growth.
• The introduction of long-term creditors may relieve some short-term cash flow pressure but adds financial obligations.

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3. Diagnosis

Welton Garden Services Limited is in a fragile but improving financial condition. The company is still in its infancy (incorporated 2021) and shows early signs of growth, as evidenced by rising net assets and fixed assets. However, the company suffers from ongoing liquidity issues, with current liabilities exceeding current assets by a significant margin, which could impair its ability to meet short-term obligations promptly.

This negative working capital is a key symptom suggesting the company must carefully manage cash flow and creditor relationships to avoid financial distress or insolvency risks. The company's low turnover and micro-entity size constrain its capacity to generate robust cash inflows quickly.

The directors’ investment (as reflected in shareholders’ funds) and careful asset management appear to be sustaining the business for now, but sustained operational profitability and improved cash flow management are crucial.

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4. Recommendations

To improve financial wellness and strengthen the company's financial health, the following targeted actions are advised:

• Enhance Cash Flow Management:
  Implement more effective debtor collection processes and negotiate extended payment terms with suppliers to reduce immediate cash outflows. Consider short-term financing options only as a bridge, not a crutch.

• Boost Revenue Generation:
  Explore opportunities to increase sales, possibly by expanding services, marketing efforts, or customer base to raise turnover beyond the modest £47k reported previously.

• Control Operating Costs:
  Monitor and optimize operational expenses to improve profit margins, which will help generate positive retained earnings and strengthen working capital.

• Review Capital Structure:
  Consider equity injections or restructuring debt to improve liquidity, reducing reliance on short-term creditors.

• Regular Financial Monitoring:
  Establish monthly financial reviews to track cash flows, receivables, payables, and key ratios, enabling early detection of liquidity strains.

• Build Cash Reserves:
  Aim to build a cash buffer equivalent to at least 3 months of operational costs to absorb fluctuations and unexpected expenses.

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Medical Analogy Summary

Welton Garden Services Limited is like a young patient recovering from an initial illness: the vital signs are slowly stabilizing, but the symptoms of distress—particularly the negative working capital—signal vulnerabilities. With attentive care (focused cash flow management and revenue growth), the company can strengthen its financial "immune system" and move towards sustained health.

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