ECACTUS SOLAR LIMITED

Executive Summary

Ecactus Solar Limited is a start-up distributor in the energy storage sector with a positive working capital position but negative shareholders’ funds due to accumulated losses and reliance on unsecured director loans. The company demonstrates adequate short-term liquidity but limited cash reserves and equity, necessitating cautious credit approval subject to close cash flow and profitability monitoring. Continued oversight of loan terms, stock management, and operational cash conversion will be essential to mitigate credit risk.

ECACTUS SOLAR LIMITED - Analysis Report

Company Number: 14261936

Analysis Date: 2025-07-29 21:01 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Ecactus Solar Limited is a recently incorporated private limited company (since 2022) operating as a distributor of battery energy storage systems. It has filed accounts on time and is active with no overdue filings. The company carries a substantial amount of unsecured, interest-free loan creditors with no fixed repayment terms, mainly from directors and related parties. This reliance on director loans and negative retained earnings (£4,802 deficit) indicates limited internal capital and potential liquidity risk. However, current assets significantly exceed current liabilities, suggesting short-term operational liquidity. Credit approval should be conditional on monitoring future cash flow stability and profitability, with caution due to the company's early stage and the nature of its creditor funding.

2. Financial Strength:
   The balance sheet shows total current assets of £291,771 against current liabilities of £40,555, resulting in net current assets (working capital) of £251,216, which is positive and indicates adequate short-term financial health. However, the company has long-term liabilities of £256,016 classified as amounts due after more than one year, which are unsecured, interest-free loans primarily from directors. Shareholders’ funds are negative at £4,802, reflecting accumulated losses or initial startup costs. The lack of fixed assets and reliance on stock and debtors as primary current assets is typical in distribution but emphasizes working capital management importance. Overall, the financial strength is moderate, with strong liquidity but weak equity and high dependency on director loans.

3. Cash Flow Assessment:
   Cash at bank is low (£17,426) relative to the stock holding (£240,678) and trade debtors (£33,406). Although net current assets are positive, the limited cash balance may constrain the company’s ability to meet immediate cash outflows without converting stock or collecting debtors promptly. The director loans being interest-free and repayable on demand provide some flexibility in managing cash flow pressures, but also represent a risk if these funds are called in unexpectedly or if new funding is not available. No employees are currently reported, which reduces fixed cash costs but also suggests a small operational scale. Monitoring cash conversion cycles and stock turnover will be critical.

4. Monitoring Points:

• Profitability and retained earnings trends in subsequent filings to assess if negative equity is being addressed.
• Cash flow from operations and liquidity ratios, especially the quick ratio excluding stock to evaluate immediate cash availability.
• The status and terms of director loans to understand potential repayment risks or refinancing needs.
• Stock valuation and turnover rates to ensure inventory is not becoming obsolete or overstocked.
• Debtor aging and credit control effectiveness to prevent cash flow bottlenecks.
• Any changes in management or ownership structure impacting control or financial strategy.