FIRST CLASS CUTS LTD

Executive Summary

FIRST CLASS CUTS LTD is a small, recently incorporated hairdressing business showing adequate short-term liquidity but modest net assets and significant long-term liabilities. While compliance with filing requirements is current, the limited financial history and low equity base suggest moderate solvency risk. Further investigation into long-term debts and operational cash flows is recommended to clarify financial stability and growth prospects.

FIRST CLASS CUTS LTD - Analysis Report

Company Number: SC684723

Analysis Date: 2025-07-29 20:26 UTC

1. Risk Rating: MEDIUM
   The company shows modest net assets and current assets exceeding current liabilities, indicating some short-term liquidity. However, the presence of significant creditors due after more than one year and relatively low shareholders’ funds suggest moderate solvency risk. The company is young and small, limiting the financial history available for deeper trend analysis.

2. Key Concerns:

• Long-term Creditors: The company has substantial liabilities due after more than one year (£13,799), which may pressure future cash flows and solvency if earnings are not sufficient.
• Thin Net Assets and Equity: Net assets and shareholders’ funds are low (£3,293 in 2023), providing limited buffer against adverse events or losses.
• Limited Financial History and Scale: As a micro-entity incorporated in late 2020, the company has limited operating history and small scale, which increases uncertainty about operational sustainability.

3. Positive Indicators:

• Current Assets Exceed Current Liabilities: The company’s net current assets improved from £6,685 in 2022 to £8,380 in 2023, indicating reasonable short-term liquidity management.
• No Overdue Filings: Both accounts and confirmation statements are filed on time, demonstrating regulatory compliance and governance discipline.
• Increasing Employee Count: Average employees increased from 2 to 3, suggesting some business growth or operational scaling.

4. Due Diligence Notes:

• Clarify Nature and Terms of Long-term Creditors: Investigate the composition, repayment terms, and interest obligations of the £13,799 long-term liabilities to assess repayment risk.
• Review Cash Flow and Profitability Trends: Obtain detailed profit and loss data beyond balance sheet figures to evaluate operational cash generation and sustainability.
• Assess Business Model and Market Position: Understand the company’s client base, competitive environment, and growth prospects in the hairdressing and beauty treatment sector.
• Director Background Check: While no adverse data is present, confirming the director’s background and capacity to manage growth would be prudent.