Company Number: 12736750

Analysis Date: 2025-07-29 14:34 UTC

1. Credit Opinion: DECLINE
   Cadoo Works Ltd demonstrates weak financial resilience and deteriorating liquidity, which raises concerns about its ability to meet debt obligations reliably. The company’s net assets and shareholders’ funds have declined significantly from £2,256 in 2023 to only £405 in 2024, signaling a weakening capital base. The current liabilities remain high relative to current assets, and net current assets dropped from a positive £1,956 to £495, indicating tighter working capital. The absence of fixed assets and minimal share capital (£2) limits collateral availability. Given these factors and the micro-entity scale with limited financial depth, extending credit without stringent conditions is not advisable.

2. Financial Strength:
   The balance sheet shows a micro-entity with low asset base and declining net worth over the last financial year. Current assets have decreased by approximately 49% from £7,778 to £3,950, while current liabilities reduced but remain substantial at £3,455. Net current assets have dropped sharply, and the overall net assets are marginal at £405. No fixed assets are recorded, highlighting limited tangible backing. The company’s capital and reserves position is weak, and the shrinking equity base reduces the financial buffer to absorb operational shocks. This profile suggests limited financial strength and vulnerability to adverse market or trading conditions.

3. Cash Flow Assessment:
   Current assets mainly consist of cash, receivables, or inventory but have almost halved in the latest year, which may constrict liquidity. The company’s working capital remains positive but has declined markedly, indicating tighter short-term liquidity. The reduction in accruals and deferred income from £300 to £900 suggests some timing issues or deferred revenue recognition, which could impact cash inflows. With an average of only 3 employees, fixed overheads are presumably low, but the narrow margin between current assets and liabilities could pose difficulties in meeting short-term obligations promptly without external support.

4. Monitoring Points:

• Track monthly cash flow closely to ensure liquidity remains sufficient to cover short-term liabilities.
• Monitor any changes in directors or PSCs, especially since one director resigned recently, which may affect management stability.
• Observe any fluctuations in current liabilities and accruals to identify potential cash flow stress or deferred expenses.
• Review upcoming filings and annual accounts for signs of further deterioration or improvement in working capital and net assets.
• Watch for any increase in share capital or asset base that could strengthen the balance sheet.