Company Number: SC734640

Analysis Date: 2025-07-29 14:33 UTC

1. Risk Rating: MEDIUM
   Edinburgh Woodwork Limited exhibits moderate financial risk. While it is active and compliant with filing requirements, its current liabilities exceed current assets, indicating liquidity challenges. However, the company maintains positive net assets and shareholders’ funds, suggesting some solvency cushion.

2. Key Concerns:

• Negative Net Current Assets: The company shows net current liabilities of £7,639 at 30 June 2024, an improvement from £13,081 the previous year but still a liquidity risk, potentially constraining operational cash flow.
• High Directors’ Loan Account: Current liabilities include £35,925 owed to directors, indicating reliance on director funding which could pose risk if this support is withdrawn or demands repayment.
• Low Cash Balance: Cash at bank is only £1,091, which is low relative to current liabilities of £77,330, highlighting limited immediate liquidity to cover short-term obligations.

3. Positive Indicators:

• Growth in Debtors and Revenue: Trade debtors increased significantly from £13,925 to £46,970, suggesting rising sales or contracts, indicating operational growth.
• Increasing Shareholders’ Funds: Shareholders’ equity increased from £1,031 to £2,576, showing retained earnings accumulation and strengthening capital base.
• No Overdue Filings: The company’s accounts and confirmation statements are filed on time, indicating good regulatory compliance and governance discipline.

4. Due Diligence Notes:

• Investigate the nature and terms of the directors’ loan account, including repayment schedule and interest charges, to assess sustainability of this financing.
• Review the aging and collectability of trade debtors, given their substantial increase, to understand cash flow timing and credit risk.
• Assess cash flow statements and forecasts (not provided) to confirm whether the company can service current liabilities and fund working capital needs.
• Clarify the intangible asset balance (£10,000 goodwill) and its economic justification, considering amortisation charge and origin.
• Confirm whether any contingent liabilities or off-balance sheet exposures exist that could impact solvency.