Company Number: 14036304

Analysis Date: 2025-07-29 18:58 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   16 PRATT LIMITED shows improving financial health with increased net current assets and shareholders’ funds over the latest year, indicating enhanced ability to meet short-term obligations. However, the company is relatively newly incorporated (2022), with modest asset and equity levels, and limited financial history to fully assess stability. Credit approval is recommended with conditions such as regular monitoring of cash flow, working capital, and repayment capacity, especially given the small scale of operations and current liabilities.

2. Financial Strength:
   The balance sheet reflects a small but improving financial base. Net current assets increased from £1,498 in 2023 to £4,810 in 2024, driven by a reduction in current liabilities from £6,737 to £3,181. Shareholders’ funds rose accordingly from £1,498 to £4,810, primarily due to retained earnings growth. Fixed assets appear minimal or not reported, consistent with the service-oriented hairdressing industry. The company operates within a micro-category size with low leverage and a clean equity position, which is positive.

3. Cash Flow Assessment:
   Cash at bank decreased slightly from £4,136 to £3,634, still maintaining reasonable liquidity relative to current liabilities of £3,181. Debtors remain steady at £3,614, suggesting stable trade receivables. The working capital position is positive, and current assets exceed current liabilities by a comfortable margin, supporting short-term liquidity. However, bank loans and overdrafts have reduced, indicating some debt repayment or refinancing. Continuous close monitoring of cash inflows and outflows is vital to ensure ongoing liquidity, especially in a sector sensitive to consumer demand fluctuations.

4. Monitoring Points:

• Maintain or improve net current asset levels to ensure liquidity adequacy.
• Monitor debtor aging to prevent cash flow disruptions.
• Track profitability and retained earnings growth to build equity buffer.
• Observe any changes in bank borrowing and overdraft usage to avoid liquidity strain.
• Watch industry trends affecting consumer spending in hairdressing and beauty treatment sectors.
• Confirm timely filing of accounts and returns to avoid compliance risks.