ART ARCHITECTURE LTD

Executive Summary

ART ARCHITECTURE LTD is a small, young architectural and consulting business with modest but improving net asset position. Its working capital is positive but tight, with cash flow showing some strain due to increased liabilities and reduced cash holdings. Credit should be extended cautiously with limits appropriate to its scale, accompanied by regular monitoring of liquidity and receivables management to mitigate risk.

ART ARCHITECTURE LTD - Analysis Report

Company Number: 13773672

Analysis Date: 2025-07-20 15:09 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   ART ARCHITECTURE LTD demonstrates a positive but modest financial position typical of a young SME. The company has maintained positive net current assets and net assets (£510 as of 2024), indicating some financial cushion. However, the low absolute values of current assets and cash balances, combined with a material increase in current liabilities in 2024 (£3,764), suggest limited liquidity flexibility. The director is the sole significant controller, which centralizes decision-making but also concentrates risk. Given these factors, credit should be extended cautiously, with limits reflective of the company’s scale and ongoing monitoring recommended.

2. Financial Strength:
   The balance sheet shows incremental growth in net assets from £217 in 2023 to £510 in 2024, indicating gradual accumulation of equity. Current assets increased primarily due to a positive swing in trade debtors (£3,200 in 2024 vs. negative debtor figure in 2023), which may reflect improved receivables management or recognition of new contracts. The company holds no fixed assets disclosed, meaning reliance on working capital for operations. Shareholders’ funds remain small but positive. Overall, the company’s financial strength is limited but stable for its size and age.

3. Cash Flow Assessment:
   Cash at bank declined sharply from £4,311 in 2023 to £1,074 in 2024, despite an increase in current assets and net assets. Current liabilities more than doubled, which could pressure short-term liquidity. Net current assets remain positive but marginal (£510), implying tight working capital. The company’s ability to meet short-term obligations depends on efficient collection of debtors and control of creditor payments. Given the small operating scale (one employee), cash flow volatility is a risk and should be monitored.

4. Monitoring Points:

• Liquidity ratios and cash balances, to ensure the company maintains sufficient working capital to meet liabilities as they fall due.
• Trade debtors aging and collectability, as a significant portion of current assets.
• Growth in current liabilities and underlying causes (e.g., supplier terms, tax obligations).
• Profitability trends once profit and loss accounts are available, to assess sustainability of equity growth.
• Director’s ongoing involvement and any changes in ownership or control that might impact governance.