DALES HOMES LIMITED

Executive Summary

Dales Homes Limited exhibits significant liquidity challenges with persistent negative working capital and low cash reserves against sizeable short-term liabilities. The company is heavily leveraged with limited equity and lacks clear profitability data, raising concerns about its capacity to service debt and meet short-term obligations. Given these financial weaknesses and limited operational scale, the credit risk is elevated, and approval is not recommended without substantial improvement in liquidity and financial transparency.

DALES HOMES LIMITED - Analysis Report

Company Number: 13060761

Analysis Date: 2025-07-29 19:35 UTC

1. Credit Opinion: DECLINE

Reasoning: Dales Homes Limited shows a very weak liquidity position with net current liabilities of £51,565 consistently over the last three years and minimal current assets (£2,606 as of 2023 year end) compared to high short-term creditors (£54,171). The company carries a substantial long-term loan of £131,250 secured against assets but with no repayment installments due within five years, raising concerns about the sustainability of debt servicing without clear cash flow generation. The company’s asset base is mainly in investment property valued at £216,000 but unverified by an independent valuer, which adds valuation risk. The financial statements lack a profit and loss account, making it difficult to assess profitability and cash generation ability. The director is the sole employee and shareholder, limiting operational and managerial depth. Given these factors, the company presents a high credit risk profile with poor working capital management and uncertain capacity to meet obligations promptly.

2. Financial Strength:

• Net assets are marginal at £26,900, supported mainly by investment property.
• Current assets remain very low (£2,606), primarily debtors and minimal cash (£379).
• Persistent negative working capital (~-£51,565) indicates liquidity stress.
• Long-term liabilities of £131,250 (loans) are significant relative to equity.
• No indication of profitability or retained earnings growth; retained earnings are negligible.
• The balance sheet suggests a company reliant on debt with limited equity cushion and weak short-term financial health.

3. Cash Flow Assessment:

• Cash on hand is minimal and declining (£1,175 in 2022 to £379 in 2023), indicating cash strain.
• Debtor balances increased but remain low, suggesting limited sales or collections.
• Negative net current assets imply reliance on creditor funding or external financing to meet short-term obligations.
• Absence of P&L data prevents assessment of operating cash flow generation.
• The director’s loan account fluctuates but remains a liability, reflecting possible informal financing.
• Overall, cash flow appears insufficient to cover current liabilities without refinancing or asset disposals.

4. Monitoring Points:

• Monitor changes in working capital position and current asset levels closely.
• Watch for any updates on independent valuation of investment property to assess asset quality.
• Track director’s loan account movements for signs of additional informal funding or repayments.
• Review forthcoming accounts for inclusion of P&L to evaluate profitability trends.
• Observe liquidity ratios, particularly current ratio and quick ratio, for improvement or further deterioration.
• Assess any changes in loan repayment terms or additional borrowings that may affect solvency.