CHERRY TREE COTTAGE ATWICK LIMITED

Executive Summary

Cherry Tree Cottage Atwick Limited is currently under financial pressure with negative net assets and a loss in the latest year, heavily reliant on director loans for solvency. While the company maintains strong net current assets driven by stock, low cash balances and operational losses pose liquidity risks. Credit approval is possible but should be conditional on continued director support and close monitoring of profitability and cash flow improvements.

CHERRY TREE COTTAGE ATWICK LIMITED - Analysis Report

Company Number: 12986450

Analysis Date: 2025-07-20 15:57 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Cherry Tree Cottage Atwick Limited shows signs of financial stress with a negative net asset position of £41,432 as of the latest accounts (FY 2023), a reversal from a positive net asset balance of £19,188 the previous year. The company is reliant on a significant director loan account (£615,000), which poses a concentration risk but also indicates ongoing director support. The loss reported (£60,620) and negative equity suggest operational or profitability challenges. Approval for credit facilities should be conditional on continued director support and monitoring of profitability improvements.

2. Financial Strength:
   The balance sheet reflects tangible fixed assets of £21,961 and current assets of £570,107, mainly comprising stocks (£564,960). The current liabilities are relatively low (£18,500), producing strong net current assets (£551,607). However, long-term liabilities are substantial (£615,000) due to the director loan account. The negative shareholders’ funds indicate accumulated losses or equity erosion. The company’s solvency depends heavily on the director loan and their willingness to maintain this support.

3. Cash Flow Assessment:
   Cash at bank is low (£4,530) compared to the previous year (£138,256), indicating potential liquidity constraints. Debtors are minimal (£617), but stocks are very high, which may indicate slow-moving or illiquid inventory that could restrict cash conversion. The strong net current assets are skewed by stock valuation rather than cash or receivables, raising concerns about short-term liquidity and working capital management.

4. Monitoring Points:

• Profitability trends and ability to return to positive retained earnings.
• Director loan account movements to confirm ongoing financial support.
• Stock turnover and liquidity to ensure working capital is effectively managed.
• Cash flow generation and maintenance of adequate cash balances.
• Timely filing of accounts and confirmation statements to assess compliance and operational control.