CARRCROFT HOMES LTD

Executive Summary

Carrcroft Homes Ltd demonstrates a weak financial position with ongoing negative equity and working capital deficits, coupled with minimal cash reserves. These factors indicate a high risk of inability to meet debt obligations, leading to a recommendation to decline credit facilities at this time. Close monitoring of liquidity improvements and management actions would be necessary before reconsidering credit support.

CARRCROFT HOMES LTD - Analysis Report

Company Number: 13243773

Analysis Date: 2025-07-29 15:06 UTC

1. Credit Opinion: DECLINE
   Carrcroft Homes Ltd shows persistent negative net current assets and shareholders’ funds over the last four years, indicating ongoing working capital deficits and erosion of equity. The company's liabilities within one year exceed its current assets, pointing to liquidity stress and potential inability to meet short-term obligations on time. The absence of cash reserves (only £13) further exacerbates repayment risk. The company operates in real estate letting, which can be capital intensive and requires strong financial backing; however, the financials show no improvement and increasing losses. Without a turnaround plan or external capital injection, the credit risk is high and approval for credit facilities is not advisable.

2. Financial Strength:
   The balance sheet is weak with shareholders’ funds deteriorating from -£1,099 in 2021 to -£3,572 in 2024. Tangible fixed assets are negligible (£105), implying limited collateral value. The consistent net current liabilities (negative working capital from -£1,186 to -£3,577) reflect poor liquidity management. Debtors are significant but have halved from £20,623 to £10,623, which could indicate collection issues or reduced business volume. Overall, the company lacks financial resilience and capital buffer to absorb shocks.

3. Cash Flow Assessment:
   Cash on hand is minimal (£13), insufficient to cover immediate payment obligations. High current liabilities (£14,213) relative to current assets (£10,636) suggest strained cash flow and potential reliance on creditor terms or external funding to meet payables. The absence of detailed profit and loss data limits cash flow insight, but the negative retained earnings and working capital deficits imply operating losses and poor liquidity. The company likely faces difficulty generating positive operating cash flow.

4. Monitoring Points:

• Improvement in net current assets and shareholders’ funds through equity injection or debt restructuring
• Debtor collection efficiency and aging profiles to assess cash conversion cycle
• Cash balances and short-term liquidity ratios (current ratio, quick ratio) for timely payment capability
• Management’s strategy to restore profitability and reduce net liabilities
• Any material changes in related party transactions or contingent liabilities