AUTO GUIDE LIMITED

Executive Summary

Auto Guide Limited demonstrates gradual balance sheet improvement but relies heavily on director loans for funding, leading to liquidity risks. While credit may be extended conditionally, close monitoring of cash flow, director loan sustainability, and operational profitability is essential to mitigate potential repayment risks. The company’s small scale and narrow working capital margin limit its resilience to economic stress.

AUTO GUIDE LIMITED - Analysis Report

Company Number: 13220504

Analysis Date: 2025-07-29 15:53 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   AUTO GUIDE LIMITED is a very small private limited company with a short trading history since incorporation in 2021. The company shows modest growth in net assets and working capital over the last three years, indicating some operational progress. However, a significant portion of current liabilities (£71,272 in 2024) relates to loans from directors, which may signal reliance on related-party funding rather than external debt capacity. The company's current assets slightly exceed current liabilities, but the cash balance is low (£8,202), which may strain liquidity. Given the small scale, limited profitability disclosure, and director loans, credit approval should be conditional on monitoring cash flow closely and obtaining further insight into the sustainability of related-party lending and business model stability.

2. Financial Strength:

• Net assets increased from £3,454 in 2021 to £10,047 in 2024, showing gradual equity build-up.
• Current assets rose from £27,026 to £87,735, mainly driven by inventories increasing from £41,312 to £67,150 and stable debtors around £12,000-15,000.
• Current liabilities increased to £77,688, largely due to director loans (£71,272), indicating limited external financing.
• Shareholders funds equal net assets, reflecting no external equity investment beyond initial capital and retained earnings.
  Overall, the balance sheet is small but shows incremental strengthening, although the high director loan component is a risk factor.

3. Cash Flow Assessment:

• Cash on hand is low and slightly decreased from £9,608 in 2023 to £8,202 in 2024 despite increasing current assets and liabilities.
• Net current assets positive at £10,047 but narrow relative to liabilities, indicating tight working capital management.
• Debtors are mostly accrued income/prepayments rather than trade receivables, which may delay actual cash inflows.
• Reliance on director loans to fund operations may mask liquidity challenges.
  The company’s liquidity position is borderline and warrants close scrutiny of cash conversion cycles and repayment plans for director loans.

4. Monitoring Points:

• Liquidity and cash flow trends: Watch cash balances and working capital cycle monthly to avoid cash shortages.
• Director loans: Confirm terms, repayment schedules, and whether these loans remain sustainable or if replacement by external finance is planned.
• Profitability and underlying trading performance: Assess future accounts for profit generation to support self-sustaining operations.
• Inventory management: Given inventory is the largest current asset, monitor turnover rates and obsolescence risk.
• Management changes: Recent director change in June 2024 requires observation for continuity and governance implications.