WHARFE VALLEY ELECTRICAL SERVICES LTD

Executive Summary

Wharfe Valley Electrical Services Ltd demonstrates strong financial health with solid liquidity, growing equity, and prudent asset management. The company shows positive working capital and cash reserves, supporting operational stability. However, increased long-term debt warrants careful monitoring to maintain financial wellness and avoid potential stress in the future.

WHARFE VALLEY ELECTRICAL SERVICES LTD - Analysis Report

Company Number: 12388931

Analysis Date: 2025-07-29 15:50 UTC

Financial Health Assessment Report for WHARFE VALLEY ELECTRICAL SERVICES LTD

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1. Financial Health Score: B

Explanation:
The company demonstrates solid financial stability with a healthy increase in net assets and strong working capital. However, there are some cautionary points, including growing long-term liabilities and a relatively small equity base. Overall, the firm is financially sound but should monitor debt levels and cash flow closely to maintain this position.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	77,207	Adequate short-term resources including cash and debtors, indicating good liquidity.
Cash at Bank	31,639	Healthy cash reserves provide a liquid buffer to meet immediate obligations.
Debtors	45,568	Reasonable level of receivables; moderate risk of delayed payments but manageable.
Current Liabilities	17,344	Well-covered by current assets, indicating comfortable short-term solvency.
Net Current Assets (Working Capital)	59,863	Strong positive working capital; signals good short-term financial health.
Total Assets Less Current Liabilities	93,223	Reflects overall net resources available after short-term debts.
Creditors Due After One Year (Long-term Debt)	15,213	Noticeable increase from previous year; could signal rising leverage and future interest burden.
Net Assets (Equity)	78,010	Growing equity base; shows retained earnings accumulation and overall business value.
Share Capital	100	Minimal share capital, typical for small private company but limited equity cushion.
Tangible Fixed Assets	33,360	Investment in vehicles and equipment increasing; reflects business growth or modernization.

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3. Diagnosis: Financial Condition Overview

WHARFE VALLEY ELECTRICAL SERVICES LTD is exhibiting signs of a healthy financial constitution, akin to a patient recovering steadily with strong "vital signs." The company has built up a significant positive working capital over the years, indicating it has ample short-term resources to cover liabilities—a sign of robust liquidity and operational efficiency. Cash reserves are solid, which is critical for day-to-day operations and unexpected expenses, reducing the risk of cash-flow related distress.

The increase in net assets and retained earnings over the years shows sustained profitability and prudent management of resources, much like a patient gaining strength over time. The company’s investment in tangible assets suggests strategic reinvestment in business operations, supporting future growth potential.

However, there are "symptoms of caution" to monitor. The rise in long-term borrowings (loans due after one year increased significantly from £2,727 to £15,213) suggests the company is taking on more debt to finance growth or operations. While this can be beneficial if managed well, it introduces financial leverage risk and potential interest obligations that could strain cash flow if not balanced by increased revenues or profits. This is akin to a patient taking medication that has side effects — necessary but requiring careful monitoring.

The minimal share capital (£100) means the "equity cushion" is thin, which is common for small companies but means that the business relies heavily on retained earnings and debt, so maintaining profitability is crucial.

Overall, WHARFE VALLEY ELECTRICAL SERVICES LTD is in good financial health but should maintain vigilance regarding debt management and cash flow. The absence of any overdue filings and the up-to-date status also reflect good governance and compliance—important factors in financial wellness.

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4. Recommendations for Financial Wellness Improvement

• Monitor and Manage Long-term Debt:
  The recent increase in long-term borrowings should be managed carefully. Consider negotiating better terms or refinancing options to reduce interest burdens and improve repayment flexibility.

• Improve Debtor Collection Processes:
  While debtors are stable, ongoing efforts to shorten debtor days and improve cash collection will strengthen cash flow and reduce exposure to bad debts.

• Build Equity Base:
  Explore options for increasing share capital or retaining more profits to bolster equity, improving the company's resilience to financial shocks.

• Maintain Healthy Cash Reserves:
  Continue prudent cash management to preserve liquidity, especially to cover any unforeseen expenses or downturns in business activity.

• Regular Financial Reviews:
  Perform periodic internal financial health checks to detect "early symptoms" of distress such as deteriorating margins or rising costs, allowing timely corrective actions.

• Plan for Asset Utilization:
  Ensure that investments in tangible assets are efficiently utilized to generate returns and not become a "financial strain" on resources.

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