Company Number: SC680378

Analysis Date: 2025-07-29 20:35 UTC

1. Risk Rating: MEDIUM

Justification: AFIT Athletic Ltd shows signs of operational continuity with positive net assets improving year-on-year, but persistent negative net current assets and reliance on director loans and hire purchase contracts indicate liquidity pressure and solvency risks that warrant caution.

2. Key Concerns:

• Negative Net Current Assets: At the 2024 year-end, the company had net current liabilities of £35,724, indicating that current liabilities exceed current assets significantly, which suggests potential short-term liquidity challenges.
• Reliance on Director Loans and Hire Purchase Debt: The company has loans from directors and hire purchase contracts totaling approximately £3,955 (non-current) and £2,519 (current). This reliance on related-party funding and external credit may signal cash flow constraints.
• Low Share Capital and Small Equity Base: With only £100 nominal share capital and net assets of £3,157 (albeit improving), the equity buffer is thin relative to liabilities, potentially limiting the company’s financial flexibility.

3. Positive Indicators:

• Increasing Net Assets: Net assets have improved from £883 in 2023 to £3,157 in 2024, reflecting retained earnings growth and underlying asset stability.
• Compliance with Filing Obligations: The company is current on both accounts and confirmation statement filings, demonstrating adherence to regulatory requirements.
• Going Concern Assumption Maintained: Directors have prepared accounts on a going concern basis without qualification, suggesting management confidence in ongoing operations.

4. Due Diligence Notes:

• Investigate Cash Flow Management: Review cash flow statements and forecasts to assess how the company manages its working capital deficit and whether operational cash inflows are sufficient to meet short-term obligations.
• Assess Director Loan Terms and Repayment Plans: Clarify the nature, repayment schedules, and conditions of director loans to understand contingent liabilities and financial support sustainability.
• Review Debtor Quality and Credit Control: Analyze the collectability of trade debtors (£3,301 in 2024) as they constitute a material portion of current assets relative to cash.