Company Number: 13835844

Analysis Date: 2025-07-20 13:32 UTC

1. Risk Rating: HIGH
   The company exhibits clear signs of financial distress, including negative net assets and worsening net current liabilities over the most recent financial year. The inability to cover short-term liabilities with current assets and accumulated losses raise significant solvency and liquidity concerns.

2. Key Concerns:

• Negative Net Assets and Shareholders’ Funds: The company moved from a modest positive net asset position (£100) in 2023 to a negative net asset position of £5,497 in 2024, indicating accumulated losses and erosion of equity capital.
• Worsening Working Capital Deficit: Net current assets deteriorated from -£3,289 in 2023 to -£7,945 in 2024, reflecting a significant shortfall in liquid resources available to meet short-term obligations. Cash on hand is very low (£822), increasing liquidity risk.
• Dependence on Director Loans: The presence of loans from directors (£81) and accruals (majority of current liabilities) may indicate reliance on informal financing and delayed payments, which could be unsustainable if operational cash flows are insufficient.

3. Positive Indicators:

• Active Status and Compliance: The company is active, not in liquidation, and filings (accounts and confirmation statements) are up to date with no overdue returns, showing adherence to regulatory requirements.
• Single Director with Significant Control: Clear governance structure with a single director and two persons with significant control may facilitate decision-making and rapid responses to financial issues.
• Modest Fixed Asset Base: Tangible assets, though small (£2,448 net), provide some capital base and operational capacity in the core painting business.

4. Due Diligence Notes:

• Review Detailed Profit and Loss Figures: The P&L account was not delivered to Companies House; obtaining these would clarify the nature and drivers of losses and operational cash flows.
• Assess Trade Debtors Quality: Debtors have reduced significantly from £7,872 to £4,410, but it is important to evaluate collectability and any overdue balances.
• Examine Creditor Terms and Accruals Composition: Accruals form the bulk of current liabilities and should be analyzed for payment terms and potential contingent liabilities.
• Evaluate Director Loans and Related Party Transactions: Clarify terms of director loans and their impact on liquidity and solvency.
• Understand Business Plan and Financial Projections: Given the young age of the company and recent losses, review management’s plans for returning to profitability and improving working capital.

Overall, BADIZZA'S DECORATORS LTD shows significant financial stress with negative equity and a growing working capital deficit. While compliance and governance are adequate, the company’s current financial trajectory raises concerns about its ability to meet obligations and sustain operations without additional capital or operational improvements.