Financial Health Assessment: HAROG LIMITED

1. Financial Health Score: A

The company receives an A grade. Its financial vital signs are strong across liquidity, solvency, and capital accumulation. Net assets have increased from £205,436 in 2016 to £2,858,182 in 2025, while cash reserves now exceed short-term creditors by more than two times. There is no long-term debt, filings are current, and the balance sheet has strengthened consistently year over year.

2. Key Vital Signs

Liquidity – blood pressure

• Current ratio: approximately 2.44:1 (current assets £2,458,282 divided by current liabilities £1,006,493). A ratio above 1.5 is generally considered healthy; this indicates the company can comfortably meet short-term obligations as they fall due.
• Cash ratio: approximately 2.08:1 (cash £2,098,696 divided by current liabilities £1,006,493). Cash alone covers short-term debts twice over, which is a very strong liquidity position.

Solvency – heart health

• Net assets: £2,858,182 (2025), up from £2,403,448 in 2024 and £205,436 in 2016.
• Long-term debt: £0 in 2025, down from £55,000 in 2024. The company has repaid its longer-term borrowings.
• Shareholders’ funds equal net assets, indicating a straightforward equity structure with no hidden claims on the balance sheet.

Capital growth – nutrition

• Retained earnings have grown steadily, with net assets increasing by roughly 19% in the latest year.
• The business appears to have funded expansion from internal resources rather than borrowing.

Working capital – oxygenation

• Net current assets: £1,451,789 (2025), up from £1,001,552 in 2024. Positive and growing working capital supports day-to-day operations without reliance on external finance.

Compliance – vaccinations

• Accounts and confirmation statement are filed on time. No overdue filings are recorded.

3. Diagnosis

The company is in robust financial health. There are no symptoms of distress: cash flow is healthy, the balance sheet is unencumbered by long-term debt, and reserves are accumulating.

The reduction in trade creditors from £842,080 to £485,207 suggests tighter supplier payment terms or improved cash management. The increase in taxation and social security creditors from £277,963 to £333,373 should be monitored to ensure it reflects timing rather than an emerging inability to meet tax obligations.

Because the latest accounts are filleted (the income statement is not publicly delivered), profitability cannot be assessed directly from turnover or profit figures. However, the consistent growth in retained earnings indicates the business has been generating and retaining surpluses.

4. Recommendations

1. Deploy surplus cash strategically. With £2.1m in cash and no long-term debt, consider whether some reserves should be invested in growth, equipment renewal, or shareholder returns rather than remaining idle.
2. Monitor tax liabilities. Track the rising taxation and social security creditor to ensure HMRC obligations are settled on time and penalties are avoided.
3. Manage creditor relationships. The sharp fall in trade creditors is positive for balance-sheet strength, but confirm suppliers are content with payment terms to maintain goodwill.
4. Introduce forecasting. Given 36 employees and a £2.8m net asset base, regular cash-flow forecasting would help anticipate seasonal or market fluctuations in the automotive fuel retail sector.
5. Review fixed asset plans. Tangible assets declined slightly (from £1,491,352 to £1,430,140) as depreciation outpaced additions. A capital expenditure plan may be warranted to maintain operational capacity.