How to Read Companies House Accounts

The profit and loss account

The P&L shows turnover (revenue), costs and profit over the period. The lines that matter most for a commercial check are turnover, operating profit and profit before tax. Watch the trend across periods rather than any single year, and compare margin — profit as a percentage of turnover — not just the absolute numbers.

The balance sheet

The balance sheet is a snapshot at the period end: what the company owns (assets), what it owes (liabilities) and the difference (net assets, equal to shareholder equity). Fixed assets, current assets, current liabilities and long-term creditors each tell part of the story. Net current assets — current assets minus current liabilities — is a rough liquidity indicator.

The notes

Notes explain the numbers: accounting policies, breakdowns of debtors and creditors, employee numbers, related-party transactions. In full accounts the notes often contain the most decision-relevant detail — for example, how much of turnover depends on a single customer.

Account types and what they leave out

• Micro-entity accounts: a minimal balance sheet, no P&L, almost no notes. You can see solvency but not profitability.
• Small company accounts: balance sheet with limited notes; P&L often filleted (withheld from the public register).
• Full accounts: P&L, balance sheet and full notes — the most informative, usually from larger companies.
• Dormant company accounts: confirm inactivity but nothing more.

A quick sanity check

Do the numbers hang together? Turnover that triples while employees stay flat, or rising profit alongside collapsing cash, deserves a second look. And always note the period end date — accounts made up to a date over a year ago describe a different company from the one trading today.