BETH GOLDING STYLIST LIMITED
Executive Summary
Beth Golding Stylist Limited is a young, small-scale artistic creation business with improving net assets and positive working capital supported by director loans. While the company has demonstrated financial growth, it has low cash reserves relative to receivables, which warrants cautious credit approval with focus on debtor management and cash flow monitoring. The company’s reliance on insider funding and single-director structure poses some risk but does not preclude modest credit facilities.
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This analysis is opinion only and should not be interpreted as financial advice.
BETH GOLDING STYLIST LIMITED - Analysis Report
Credit Opinion: APPROVE (with caution) Beth Golding Stylist Limited is a very young company (incorporated 2022) with modest financial size but showing significant growth from the first to second year. The company has a positive net asset base and working capital, supported by director advances. However, it is a single-person enterprise with limited operational scale and relatively high debtor balances compared to cash. The business is in the artistic creation sector, which can have variable cash flow patterns. Approval is recommended for modest credit facilities, with monitoring of debtor collections and cash flow.
Financial Strength:
- Net assets improved substantially to £28,624 in the year ending Feb 2024 from £100 the prior year, indicating growth and capital injection via director loans.
- Fixed assets are minimal (£400), aligned with an asset-light service business.
- Current assets at £53,275 comprise £43,334 debtors and £4,334 cash, showing business-generated receivables but relatively low cash liquidity.
- Current liabilities stand at £25,051, resulting in net current assets of £28,224, reflecting a comfortable short-term liquidity buffer.
- Shareholders’ funds of £28,624 mainly comprise profit and loss reserves and share capital of just £100, indicating accumulated earnings or director loans included in reserves.
- Director loans of £39,736 (unsecured, repayable on demand with interest) bolster financial resources but also create reliance on insider funding.
- Cash Flow Assessment:
- Cash on hand is low (£4,334) relative to debtors (£43,334), suggesting potential liquidity risk if debtor collections slow.
- The company depends on timely collection of receivables to maintain cash flow adequacy.
- Working capital is positive, but the business should focus on improving cash conversion cycles.
- No overdrafts or formal borrowings are reported, which is positive.
- The director loan provides a financial cushion but is not a substitute for operational cash flow.
- Monitoring Points:
- Debtor aging and collection effectiveness to ensure cash flow stability.
- Emerging profitability trends and ability to generate free cash flow.
- Changes in director loans and repayment patterns to assess reliance on insider funding.
- Expansion or diversification of client base to reduce risk of customer concentration.
- Timely filing of accounts and confirmation statements to maintain compliance.
- Overall business growth and changes in working capital structure.
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