ALDOUS LTD

Executive Summary

Aldous Ltd has improved its balance sheet position since inception but continues to exhibit significant liquidity risk due to a large working capital deficit driven by high current liabilities and substantial debtors. Credit extension is recommended only conditionally, pending further information on debtor collectability and cash flow forecasts. Close monitoring of liquidity metrics and working capital management is essential to mitigate credit risk.

ALDOUS LTD - Analysis Report

Company Number: 14027247

Analysis Date: 2025-07-29 14:46 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Aldous Ltd is a very young company (incorporated 2022) operating in "Other business support service activities" (SIC 82990). The latest accounts show a marginally positive net asset position (£91k) after two years of net liabilities. However, the company exhibits significant working capital deficits with current liabilities (£12.6m) exceeding current assets (£8.4m), resulting in a negative net current asset position of £4.25m. This indicates liquidity strain and potential difficulties meeting short-term obligations. The large increase in debtors (£8.35m) and creditors (£12.6m) within one year suggests the company is involved in substantial trading volumes or complex financing arrangements but also exposes it to collection and payment risk. The directors have not provided a profit and loss account, limiting insight into profitability or cash generation. Given the sizeable short-term liabilities and weak liquidity, credit approval should be conditional on further clarification of the nature and collectability of debtors, creditor arrangements, and cash flow projections. Monitoring of debtor ageing and creditor terms is essential.

2. Financial Strength
   The company’s fixed assets increased substantially from £1.05m to £4.34m, including £741k in investments, indicating asset growth and potential capital injection. Shareholders' funds improved from negative £46.8k to positive £91k, reflecting some equity strengthening or profitability. However, the balance sheet is still fragile with a large working capital deficit driven by current liabilities far exceeding current assets. The high level of current liabilities relative to assets raises concerns about short-term solvency and reliance on creditor financing. The company employs only 2 people, consistent with a small business profile.

3. Cash Flow Assessment
   Cash on hand remains minimal (£13k) relative to the scale of current liabilities (£12.6m). The large debtor balance (£8.35m) compared to cash indicates potential cash flow timing issues and reliance on debtor collections to fund operations. Negative net current assets highlight potential liquidity risk. The absence of a disclosed profit and loss account and cash flow statement limits analysis but current figures suggest the company may struggle to meet immediate cash obligations without additional financing or collection of receivables. Monitoring cash conversion cycle and debtor collection performance is critical.

4. Monitoring Points

• Debtor collection periods and quality of receivables
• Creditor payment terms and risk of supplier pressure
• Cash flow forecasts and liquidity position updates
• Changes in net current asset position and working capital management
• Any related party transactions or financing arrangements behind large balances
• Profitability trends once profit and loss accounts are available

Summary: Aldous Ltd shows signs of growth in assets and equity but faces liquidity challenges due to a large working capital deficit and high short-term liabilities. The company’s ability to service debt depends heavily on successful collection of substantial debtors and management of creditor payments. Credit should be extended cautiously with conditions requiring transparency on cash flow and working capital management.