S.ELECTRIX LTD

Financial Health Score: C — Fair (Guarded)

The company is registered, active, and up to date with its statutory filings, and its balance sheet shows positive net assets. However, cash is negligible, short-term creditors have risen sharply, and equity is thin relative to total liabilities. This pattern indicates a business that is trading but with limited capacity to absorb a shock.

Key Vital Signs

Liquidity (pulse and blood pressure)
- Cash at bank: approximately £165 at 31 January 2026. The balance sheet presents this figure in parentheses, suggesting a minimal overdraft or nil balance. This is down from £51,276 in the year to January 2023. A healthy business should hold enough cash to cover several weeks of operating costs; this reading is critically low.
- Current ratio: roughly 1.09:1 (current assets of £364,657 divided by short-term creditors of £336,103). Just above 1:1, meaning the company can theoretically cover its immediate debts, but with almost no margin for error.
- Quick ratio: approximately 1.00:1 once stock is excluded. Without converting stock into cash, liquid assets barely match short-term obligations. Much of this apparent liquidity is tied up in debtors rather than cash.

Capital and solvency (body temperature)
- Net assets: £20,624, up from £8,029 the prior year. Positive equity is encouraging, particularly after a negative equity position in the year to January 2021.
- Shareholders’ funds: £20,624, consisting of £1 share capital and £20,623 retained earnings.
- Gearing: total external liabilities are roughly £347,000 against equity of roughly £21,000 — a very high ratio. The business is operating on a thin capital cushion; a relatively modest loss could erase equity.

Working capital circulation
- Debtors: £336,745, nearly triple the prior year’s £119,997. Debtors now represent about 92% of current assets. Sales appear to be growing on credit, but cash collection has not kept pace.
- Stock: £28,077, up modestly from £19,463.
- Short-term creditors: £336,103, more than triple the prior year’s £98,682. The company is financing activity increasingly through supplier credit.

Compliance (vaccination record)
- Accounts and confirmation statement are not overdue. The latest accounts are unaudited and abridged, prepared under the small companies regime, which is appropriate for its size.

Symptoms Analysis

The accounts describe a company experiencing sales growth, yet the cash pulse is faint. The tripling of debtors and short-term creditors suggests the business may be overtrading — expanding activity faster than cash is being collected. Cash has fallen from £51,276 (2023) to approximately £165 (2026), while the balance sheet now rests heavily on money owed by customers.

The accounts state that the director’s loan account was overdrawn by £20,321 at the balance sheet date and was subsequently cleared in full by declaration of a dividend. This related-party balance sits inside debtors and, while cleared, highlights that cash has been drawn from the business and replaced through profit distribution rather than retained as working capital.

Fixed assets have declined (from £6,475 to £3,412) following disposals, indicating the company is not reinvesting heavily in equipment at present.

Diagnosis

Condition: liquidity fragility with thin solvency margins.
The company is not balance-sheet insolvent (net assets are positive), but it is financially vulnerable. Its “blood pressure” — the ability to meet short-term obligations from liquid assets — is low. If a significant customer fails to pay, or if creditors demand faster repayment, the company could face acute pressure despite reporting growth.

Prognosis

Guarded but improvable.
The outlook depends on converting debtors into cash and rebuilding reserves. If credit control tightens and profits are retained rather than distributed, the company can strengthen its position over the next 12–24 months. Without those changes, a single bad debt or creditor escalation could trigger a cash crisis.

Recommendations

1. Implement a rolling 13-week cash flow forecast to monitor the weekly cash pulse and anticipate shortfalls before they become urgent.
2. Tighten credit control: issue invoices promptly, chase overdue debtors, and consider invoice discounting or factoring to release cash tied up in the £337,000 debtor ledger.
3. Rebuild cash reserves before paying further dividends. Retain profits to strengthen the thin equity cushion.
4. Negotiate with major creditors to align payment terms with debtor collection, avoiding reliance on ever-increasing short-term credit.
5. Keep the director’s loan account clear and avoid overdrawn related-party balances unless formally documented and repaid.
6. Explore a modest overdraft or revolving credit facility as a buffer against timing mismatches between debtor receipts and creditor payments.
7. Review pricing and direct costs to ensure sales growth converts into genuine cash profit, not just accounting profit.
8. Maintain current filing compliance; the clean record with Companies House should be preserved.