A. B. TOUCH-UPS LIMITED

Executive Summary

A.B. Touch-Ups Limited operates in retail of motor vehicle parts with modest financial resources and limited fixed assets. The company exhibits positive but declining net assets and working capital, with tight liquidity and significant current liabilities. Conditional credit approval is recommended, contingent on ongoing monitoring of cash flow, working capital management, and updated financial information to ensure continued debt servicing capability.

A. B. TOUCH-UPS LIMITED - Analysis Report

Company Number: 12491882

Analysis Date: 2025-07-20 17:39 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   A.B. Touch-Ups Limited is a small private limited company with consistent filings and an active trading status. While the company maintains positive net current assets and net assets, there has been a decline in financial strength in the latest year, including a reduction in net assets from £6,517 to £3,060 and a shrinkage in working capital. Bank loans have also significantly reduced, which is positive, but current liabilities remain high relative to current assets. Credit approval is recommended with conditions requiring close monitoring of liquidity and cash flow, alongside updated management accounts to verify operating profitability and cash generation.

2. Financial Strength:

• The company holds modest net assets (£3,060 as of 31 March 2024) and shareholders' funds that have declined year-on-year, indicating reduced financial buffer.
• Tangible fixed assets are minimal (£5), so value is concentrated in current assets, mainly stock (£51,000), which is relatively high compared to cash (£12,597) and debtors (£1,839).
• Current liabilities remain substantial (£62,381), including bank loans (£3,802), corporation tax (£26,102), and other creditors, highlighting potential pressure on short-term solvency.
• The reduction in bank loans from £33,112 to £3,802 is positive but does not fully offset the high current liabilities.
• No provisions for liabilities or contingent liabilities are noted beyond a prior year provision of £175.

3. Cash Flow Assessment:

• Cash at bank increased slightly to £12,597 but remains low relative to current liabilities, indicating tight liquidity.
• Net current assets are positive but have halved from £5,983 to £3,055, suggesting working capital management challenges.
• Debtors remain low and stable, but stock levels are high, which may impact cash conversion cycles and liquidity risk.
• The company reported no audit requirement and limited disclosure of profitability or cash flow from operations, so there is uncertainty about true cash generation capacity.
• Reliance on stock as a major current asset requires confirmation of stock liquidity and turnover to ensure cash can be realized quickly if needed.

4. Monitoring Points:

• Monitor cash balances and the trend of working capital monthly to ensure liquidity remains adequate to meet short-term obligations.
• Review updated management accounts or cash flow forecasts for evidence of operational profitability and positive cash flow generation.
• Closely watch creditor aging and debtor collections to mitigate risk of payment delays or defaults.
• Confirm the valuation and turnover of stock to assess risk of obsolescence or slow-moving inventory impacting liquidity.
• Track corporation tax and other taxation payments to avoid unexpected liabilities or penalties.
• Assess any changes in bank loan facilities or new borrowings that could affect gearing and interest coverage.