Company Number: 13167670

Analysis Date: 2025-07-20 11:12 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   A Common Purpose Ltd demonstrates a positive net asset position and improving net current assets, indicating a stable financial base. However, the company is relatively young (incorporated 2021) and small in scale, with modest share capital (£1.00) and some director balances outstanding. The director has repaid a significant portion of advances, which suggests responsible stewardship. Approval is recommended with conditions: ongoing monitoring of liquidity and director advances, and confirmation of sustainable cash flows before extending significant credit facilities.

2. Financial Strength:
   The balance sheet shows net assets increased from £38k in 2021 to £108k in 2024, reflecting retained earnings growth and business expansion. Fixed assets are modest (£13k net), appropriate for a specialised design firm. Current assets (£169k) exceed current liabilities (£72k), resulting in a healthy net current asset position (£97k), which improved compared to prior years. A reduction in cash balances from £191k to £117k warrants attention but remains sufficient to cover short-term obligations. The director’s advances reduced from £55k to £23k, which is positive but a remaining balance exists, exposing some financial reliance on director funding.

3. Cash Flow Assessment:
   Cash at bank declined between 2023 and 2024, suggesting increased operational outflows or investment. Debtors increased slightly but remain manageable. Current liabilities dropped significantly, improving liquidity ratios. The net current asset position and positive working capital suggest the company can meet short-term obligations. However, the absence of an income statement limits assessment of profitability and cash generation from operations. Close monitoring of cash flow statements and debtor collections is recommended to ensure liquidity remains stable.

4. Monitoring Points:

• Director’s advances and repayments to avoid over-reliance on related party funding.
• Cash balances and working capital trends to ensure liquidity remains adequate.
• Debtor aging and credit control effectiveness to mitigate bad debt risk.
• Timely filing of accounts and confirmation statements to maintain compliance and transparency.
• Business growth indicators and order book status, given the specialised design sector’s competitive nature.