Company Number: SC671075

Analysis Date: 2025-07-19 12:15 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Airth Electrical Ltd is a very small electrical installation business with limited financial resources and a negative working capital position. While the company is active and filing accounts timely, its net current liabilities and reliance on director loans represent credit risk. Approval for credit facilities should be conditional on close monitoring of cash flow, repayment of director loans, and continued contract wins to improve liquidity and reduce short-term obligations.

2. Financial Strength:

• The company’s net assets are nominal (£20) and share capital minimal (£10), reflecting a micro-sized entity.
• Fixed assets increased significantly to £26,182 in 2024 from £15,174 in 2023, mainly due to new motor vehicles and equipment, indicating investment in operational capacity.
• Current assets (£19,414) are well below current liabilities (£38,331), resulting in a negative net working capital of £-18,917. This weak liquidity position is a concern as it indicates the company may struggle to meet short-term obligations without external funding or director loans.
• Long-term liabilities include finance leases of £7,245, adding to leverage and fixed commitments.
• The increase in director loan accounts to £16,197 (2024) from £8,295 (2023) suggests reliance on insider funding for working capital needs rather than external creditworthiness.

3. Cash Flow Assessment:

• Cash on hand improved to £16,561 in 2024 from £13,776 in 2023, showing some positive cash generation or additional funding.
• Debtors decreased to £1,353 from £2,183, which may reflect collections improving but also a reduced sales volume or tighter credit terms to customers.
• Stock reduced slightly to £1,500, indicating modest inventory levels consistent with electrical installation services.
• The negative working capital and increased finance lease obligations indicate tight liquidity and potential cash flow pressure. The company depends on director loans and possibly new financing to maintain operations.
• No audit or profit and loss details were provided, but the small profit and loss reserve (£10) suggests limited retained earnings and profitability.

4. Monitoring Points:

• Track working capital improvements, specifically reductions in current liabilities or increases in current assets.
• Monitor director loan balances and any external borrowings for signs of increasing financial stress or reliance on insider funding.
• Observe cash flow trends quarterly, especially cash conversion from receivables and payment terms with suppliers.
• Review any changes in fixed assets and finance lease obligations to assess capital expenditure and leverage.
• Keep an eye on industry conditions and contract pipeline, as the electrical installation sector can be sensitive to economic cycles.
• Ensure continued timely filing and no adverse changes in director conduct or company status.