CTO LIGHTING LIMITED
Company number 03419851 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Financial Health Score: B+
CTO Lighting Limited receives a B+, indicating good underlying financial health with some areas requiring monitoring. The company’s balance sheet is solvent and well-capitalised, with net assets more than doubling since 2017 and no outstanding bank borrowings. The grade is capped at B+ rather than higher because the filed accounts are filleted, meaning the profit and loss account is not publicly available, so profitability cannot be independently verified. Additionally, a large proportion of debtors consists of a director loan with no set repayment date, which introduces a concentration risk that would need to be resolved to support an A grade.
1. Key Vital Signs
| Vital Sign | Latest Reading (31 March 2026) | Interpretation |
|---|---|---|
| Solvency (Net Assets) | £2,886,057 | The company’s total assets exceed its total liabilities by a substantial margin. Net assets have grown from £1,260,614 in 2017, indicating a strong equity cushion and no balance-sheet insolvency. |
| Liquidity (Current Ratio) | Approximately 2.7 : 1 | Current assets of £2.80m against short-term creditors of £1.05m means the company holds roughly £2.70 of short-term assets for every £1 of immediate obligations. This is a healthy liquidity position. |
| Immediate Cash Coverage | Cash £612,805 vs creditors due within one year £1,053,595 | Cash alone covers about 58% of liabilities due within the year. This is adequate, especially given that debtors and stock provide additional coverage, but cash is not sufficient to settle all short-term creditors outright. |
| Working Capital (Net Current Assets) | £1,746,260 | Positive and growing working capital indicates the business can fund its day-to-day operations without relying on external borrowing. |
| Debt Structure | Bank borrowings: £nil | Short-term liabilities are trade creditors, customer advances, taxes and accruals. There are no bank loans or overdrafts, meaning no debt-servicing burden and no secured bank charge currently drawn upon. |
| Asset Quality | Debtors £882,306, of which £593,477 is a director loan | About two-thirds of total debtors is owed by the directors rather than trade customers. The accounts state this balance carries interest at the official rate but has no set repayment date. |
| Filing Compliance | Accounts and confirmation statement up to date | No overdue filings, indicating sound regulatory health and reducing the risk of Companies House penalties or strike-off action. |
2. Diagnosis
Overall condition: The company is financially stable and solvent. Its “bone structure” (equity and net assets) is strong, its “pulse” (short-term liquidity) is steady, and it carries no bank debt. There are no acute symptoms of distress such as winding-up petitions, overdue statutory filings, or negative net assets.
Symptoms analysis:
- Cash flow pulse: Cash has recovered from the 2024 low of £279,318 to £612,805 in 2026, but remains well below the 2021 peak of £1,721,807. The recovery is positive, but the business is holding less liquid cash than it has in prior years.
- Concentration risk: The accounts state that the directors owed the company £593,477 as at 31 March 2026, with no set repayment date. This balance sits within debtors. If this amount were not recoverable, it would materially weaken reported net current assets and overall solvency.
- Profitability opacity: Because the accounts are filleted, the profit and loss account has not been delivered to the Registrar. It is therefore not possible to confirm whether the growth in net assets is being driven by sustained trading profits, asset revaluations, or other movements.
- Working capital movements: Stock has fallen from £1,568,548 (2025) to £1,304,744 (2026), and trade creditors have fallen from £439,491 to £254,654 over the same period. This could reflect tighter inventory management and prompt supplier payment, or it could signal reduced purchasing and sales activity. Without turnover data, the cause is unclear.
- Customer advances: Advanced deposits from customers have risen to £416,693. This is a source of cash but also represents a liability to deliver goods or services in the future.
Prognosis: Stable to cautiously optimistic. The strong equity base and liquidity provide a buffer against short-term shocks. If cash continues to rebuild, trade debtors are collected, and the director loan is managed prudently, the outlook is positive. The main risks to the prognosis are the unknown profitability position, the recoverability of the director loan, and the obligation attached to customer advances.
3. Recommendations
- Prepare and review monthly management accounts including a profit and loss account. This will allow the business to monitor gross margin, operating profit and cash generation, which cannot be assessed from the filed filleted accounts alone.
- Formalise the director loan account. The accounts state the directors owe £593,477 with no set repayment date. The company should consider agreeing a repayment schedule or at least a regular review date, while continuing to charge interest at the official rate as disclosed.
- Separate trade debtors from related-party balances. Monitoring trade debtors independently will give a clearer picture of customer collection performance and reduce the risk of overstating liquid assets.
- Build a 12-month cash flow forecast. Incorporate customer advances, stock purchases and creditor payment dates to ensure liquidity remains sufficient, particularly given that cash alone does not cover all short-term creditors.
- Review stock turnover and purchasing plans. The reduction in stock and trade creditors should be examined to determine whether it reflects efficient inventory management or a slowdown in demand.
- Maintain current filing compliance. Continuing to file accounts and confirmation statements on time will preserve good standing at Companies House and avoid unnecessary penalties.