CARRELL DEVELOPMENTS LTD

Executive Summary

Carrell Developments Ltd is a small but solvent real estate trading company with positive net current assets supported primarily by stock holdings. Despite modest financial strength and minimal cash balances, the company appears capable of meeting obligations provided it maintains effective working capital management. Credit approval is recommended with conditions focused on liquidity monitoring and operational cash flow performance.

CARRELL DEVELOPMENTS LTD - Analysis Report

Company Number: SC682591

Analysis Date: 2025-07-29 20:35 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Carrell Developments Ltd shows a stable but modest financial position typical for a small real estate trading company. The company maintains positive net current assets and shareholders' funds, indicating solvency and a buffer against short-term liabilities. However, current liabilities have risen notably, and cash on hand is minimal (£43), which presents a liquidity risk. The company’s ability to meet immediate obligations depends heavily on converting stock (property inventory) into cash. Approval is recommended with conditions: close monitoring of working capital, particularly cash flow from sales, and ensuring no material increase in short-term debt without corresponding liquidity support.

2. Financial Strength
   The balance sheet displays small tangible fixed assets (£784) and a large proportion of current assets held as stocks (£552,658). Shareholders’ funds have decreased slightly from £80,195 in 2022 to £72,801 in 2023, reflecting some erosion in retained earnings or accumulated losses. The increase in current liabilities from £373,280 to £480,684 suggests rising short-term obligations. Overall, while the company remains solvent, the financial strength is moderate with limited fixed asset backing and reliance on stock turnover for liquidity.

3. Cash Flow Assessment
   Cash at bank is critically low at £43 as of the latest accounts, down from £7,130 the previous year, which is a concern for liquidity. The net current assets remain positive (£72,017) due to substantial stock values, but stock is less liquid and can be subject to market conditions. The working capital position requires careful management to avoid cash shortfalls. The company must ensure timely real estate sales or other cash inflows to cover creditors falling due within one year. Lack of disclosed income statement data limits detailed cash flow analysis but the balance sheet points to tight operational cash flow.

4. Monitoring Points

• Liquidity trends: Monitor cash balances and stock turnover rates monthly to detect potential cash flow stress.
• Current liabilities: Watch for any significant increases, especially short-term creditors, that might strain liquidity.
• Sales performance: Track property sales closely, as revenue generation is crucial to converting stock into cash.
• Profitability and reserves: Review annual profitability trends when income statements become available to assess earnings quality and retained earnings movements.
• Director and management actions: Stay alert for any changes in management or strategic shifts impacting financial risk.