ERDAL'S BARBER LTD

Executive Summary

Erdal's Barber Ltd is a micro-entity with a fragile financial position characterized by minimal equity and tight working capital. The company remains compliant and operational but shows signs of declining net asset value and increasing liabilities, suggesting limited financial resilience. Conditional credit approval is advised with careful monitoring of liquidity, debtor management, and tax obligations to mitigate risk.

ERDAL'S BARBER LTD - Analysis Report

Company Number: 13332628

Analysis Date: 2025-07-29 15:15 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Erdal's Barber Ltd is a micro-sized, privately owned hairdressing business with limited financial resources and modest net assets (£120 as of March 2025). The company exhibits minimal working capital and equity, which constrains its ability to absorb financial shocks or fund expansion without external support. However, the company remains active, compliant with filing deadlines, and under stable single-director management. Conditional approval is recommended with limits on facility size and requirements for short-term monitoring of liquidity and debtor collections.

2. Financial Strength:

• The company has a very small balance sheet, in line with micro-entity classification.
• Net assets reduced significantly from £579 in 2021 to £120 in 2025, indicating a decline in retained earnings and equity base.
• Current assets (£3,681) barely exceed current liabilities (£3,561), yielding a narrow positive working capital of £120.
• Share capital is nominal (£100), with accumulated reserves only £20.
• The company is solvent but financially fragile, with limited buffer against adverse events.

3. Cash Flow Assessment:

• Cash holdings have fluctuated slightly but remain low (£2,238 in 2025 vs £2,450 in 2024).
• Debtors increased notably to £1,143 in 2025, which may impact cash conversion cycles and liquidity if not collected promptly.
• Current liabilities rose to £3,561 mainly due to taxation and social security payables, suggesting tight cash outflows.
• Working capital management appears critical; any delays in debtor payments or unexpected expenses could strain liquidity.

4. Monitoring Points:

• Track debtor ageing and collection efficiency to ensure cash inflows match outflows.
• Monitor tax and social security obligations to avoid penalties or enforcement action.
• Watch operating profitability trends, as diminishing reserves point to potential ongoing losses or insufficient margins.
• Review any changes in director or ownership status that could impact governance or financial stewardship.
• Assess impact of market conditions on client demand in the hairdressing sector.