Company Number: 12946444

Analysis Date: 2025-07-20 16:18 UTC

1. Credit Opinion: APPROVE with caution. ARAA SERVICES LIMITED shows a positive net asset position and net current assets across the last few years, indicating the company has sufficient short-term liquidity to meet current liabilities. However, a significant decline in current assets and net current assets in the latest financial year (2024) compared to the prior two years warrants monitoring. The company is small and relatively young (incorporated 2020) but maintains compliance with filing deadlines and has stable management. The small scale and micro entity status suggest limited financial resilience if trading conditions deteriorate.

2. Financial Strength: The balance sheet shows net assets of £15,834 at 31 October 2024, down from £37,042 the previous year. Current assets decreased from £45,985 to £22,588, while current liabilities reduced from £8,943 to £6,754. Shareholders’ funds mirror net assets, reflecting no external debt. The company’s capital base is very modest (£1 share capital) but accumulated reserves contribute to equity. Overall, the financial position is stable but shows a contraction in working capital and net assets, indicating possible lower retained earnings or asset disposals.

3. Cash Flow Assessment: Net current assets of £15,834 indicate positive working capital and ability to cover short-term obligations. However, the halving of current assets in 2024 suggests reduced liquidity, possibly from lower cash or receivables. The company employs 3 people, up from 2, which may increase operating costs. No external borrowings are reported, so cash flow risk from debt servicing is low. The micro-entity status limits disclosure, so detailed cash flow data is unavailable, but current ratios remain above 2:1, generally acceptable.

4. Monitoring Points:

• Continued trend in shrinking current assets and net assets; verify causes and impacts on liquidity.
• Profitability and cash generation in future accounts to assess sustainability.
• Management of working capital, especially receivables and payables.
• Impact of any business expansion or cost increases given small equity base.
• Compliance with filing deadlines and any changes in director appointments or ownership.