Company Number: SC676738

Analysis Date: 2025-07-29 20:21 UTC

1. Risk Rating: MEDIUM
   Justification: Carfin Consult Ltd shows positive net current assets and shareholders' funds as of the most recent accounts, indicating solvency. However, a notable decline in cash reserves from £59,812 in 2023 to £38,504 in 2024, alongside increasing director loans and current liabilities, suggests emerging liquidity pressure. The company is small, operating in a niche consulting segment, with no audit requirement, limiting external financial scrutiny.

2. Key Concerns:

• Declining cash position: Cash dropped significantly (~36%) year on year, which could impair short-term payment capacity.
• Rising director loan balance: The company owes over £12,000 to a director, indicating reliance on related party funding rather than operational cash flow.
• Reduced net assets and retained earnings: Shareholders' funds declined from £44,887 to £26,239, reflecting potential operational losses or capital erosion.

3. Positive Indicators:

• Positive net current assets (£18,269) and shareholders' funds (£26,239) demonstrate ongoing solvency.
• Consistent directors with aligned domicile and governance suggest stable leadership.
• Timely filing of accounts and confirmation statements indicates regulatory compliance and good governance practices.

4. Due Diligence Notes:

• Review the Profit & Loss Account or management accounts to understand causes of decreased retained earnings and cash.
• Assess the terms and future plans regarding the director loan balance and any plans to repay or convert this into equity.
• Understand the nature and sustainability of the company's revenue streams in the engineering consulting sector.
• Confirm no contingent liabilities or off-balance sheet obligations that could affect solvency.
• Investigate asset valuation policies and fixed asset depreciation to ensure appropriate accounting treatment.