Company Number: 13165978

Analysis Date: 2025-07-20 14:00 UTC

1. Risk Rating: MEDIUM
   Budget Tyres Ltd exhibits some liquidity concerns with negative net current assets in each reporting year, though it shows growth in net assets and shareholder funds. The company is active, compliant with filing deadlines, and has a single director with complete ownership, which concentrates control but also simplifies governance. However, limited cash reserves relative to current liabilities and reliance on a sole director present moderate operational and financial risks.

2. Key Concerns:

• Liquidity Deficit: The company’s net current assets are negative for four consecutive years, with current liabilities exceeding current assets by £4,664 as of January 2024, suggesting potential short-term cash flow stress.
• Low Cash Reserves: Cash at bank dropped from £3,628 in 2023 to £538 in 2024, increasing the risk of inability to meet immediate obligations without external financing or asset liquidation.
• Concentrated Control and Single Employee: With one director holding 75-100% ownership and the company employing only one person (the director), operational continuity and governance could be vulnerable to personal circumstances or capacity constraints.

3. Positive Indicators:

• Increasing Net Assets and Shareholder Funds: Shareholder equity nearly doubled from £5,255 in 2023 to £9,294 in 2024, indicating some retained profitability or capital injection.
• No Filing or Compliance Issues: Accounts and confirmation statements are filed on time with no overdue reports, demonstrating good regulatory compliance.
• Tangible Fixed Assets Growth: The company increased its plant and machinery assets by about £3,300 in the last year, implying investment in operational capacity.

4. Due Diligence Notes:

• Investigate the nature and timing of the company’s cash inflows and outflows to assess liquidity management and working capital cycle.
• Review the company’s profit and loss account (not included in the filing) to understand profitability trends and cash generation capability.
• Assess potential contingent liabilities or off-balance sheet commitments that might further impact liquidity or solvency.
• Understand the business model and market position given the very small workforce and limited share capital.
• Verify director’s plans for operational continuity and any risk mitigation for single-person dependency.
• Confirm the status of corporation tax liabilities and other creditors to evaluate short-term financial obligations.