BOUNCEABILITY LIMITED

Credit Analysis: BOUNCEABILITY LIMITED

Company Number: 03704590 Date of Analysis: [Current Date] Facility Sought: Not specified; general assessment for creditworthiness.

1. Credit Opinion: DECLINE

Reasoning: This micro-entity presents an unacceptable credit risk. The business demonstrates a clear and persistent downward financial trajectory with a significant deterioration in net assets and working capital in the latest year. The balance sheet has shrunk by over 40% year-on-year, and the company has moved from a positive working capital position to a negative one. While the company is compliant in its filings and has a long history, the core financial metrics indicate a business in contraction, not one capable of servicing additional debt. The lack of disclosed turnover, profit, or cash flow information (standard for micro-entity accounts) provides insufficient visibility to assess repayment capacity. Given the declining asset base, eroding shareholder funds, and a single director with 100% control, the risk of default is considered high.

2. Financial Strength: Weak and Deteriorating

• Net Assets: Have declined for three consecutive years, from £22,618 (2021) to £7,568 (2025). This represents a 66% erosion of the company's equity base over four years. The business has limited capital cushion to absorb losses.
• Total Assets: Have fallen from £32,751 (2021) to £14,491 (2025), a 56% reduction. The asset base is contracting, suggesting the business is either selling off assets or not reinvesting.
• Liabilities Profile: Total liabilities have remained relatively stable (between £6,923 and £11,385 over the last five years), but as assets shrink, the gearing ratio has increased significantly. The business is becoming more leveraged relative to its asset base.
• Capital & Reserves: Shareholders' funds are entirely composed of retained earnings (P&L Reserve). The consistent decline in reserves indicates the business has been making losses or making significant withdrawals (e.g., dividends) that have exceeded profits. This is a major red flag for a lender.

3. Cash Flow Assessment: Insufficient Visibility & Negative Signal

• Lack of Data: As a micro-entity, the company is not required to file a profit and loss account or cash flow statement. This means we cannot directly assess revenue, profitability, or cash generation.
• Working Capital (Net Current Assets): This is the most critical warning sign. The company moved from a positive net current asset position of £3,775 (2024) to a negative position of -£402 (2025) . This means current liabilities now exceed current assets.
• Implication for Liquidity: A negative working capital position indicates the company is technically illiquid. It does not have enough short-term assets (cash, debtors, stock) to cover its immediate debts (trade creditors, loans, HMRC). This is a classic precursor to insolvency. The decline in current assets from £11,299 to £6,521 (a 42% drop) while current liabilities fell only 8% is the primary driver of this deterioration.
• Debt Servicing: Without profit data, we cannot calculate an Interest Coverage Ratio. However, with a shrinking asset base and negative working capital, it is highly improbable that the business could service a new loan repayment on top of its existing obligations.

4. Monitoring Points (If Credit Were to be Extended)

Note: Given the DECLINE opinion, these are hypothetical but would be critical if a facility were considered.

• Working Capital Trend: Closely monitor the movement in current assets vs. current liabilities on a monthly/quarterly basis. A further deterioration in the net current asset position is a deal-breaker.
• Director's Remuneration & Dividends: Request bank statements to understand the flow of funds to the sole director. High levels of drawings in a declining business suggest asset stripping rather than reinvestment.
• Profitability (P&L): Request management accounts to see gross and net profit margins. The business needs to demonstrate it can generate a sustainable profit to rebuild its reserves.
• Personal Guarantee: The only viable way to extend credit would be with a full, unlimited personal guarantee from the director, Mr. Paul Hurd, supported by a full asset and liability declaration.