IDEAL LINEN HIRE LTD

Executive Summary

Ideal Linen Hire Ltd is a newly established micro-entity showing negative net assets and working capital deficits after its first year, indicating limited financial strength and liquidity. Due to insufficient financial track record and current balance sheet weakness, credit approval is declined at this time. Close monitoring of liquidity, profitability, and capital position is essential should credit be reconsidered in the future.

IDEAL LINEN HIRE LTD - Analysis Report

Company Number: 15020304

Analysis Date: 2025-07-29 20:31 UTC

1. Credit Opinion: DECLINE
   Ideal Linen Hire Ltd is a recently incorporated micro-entity with its first financial year ended 31 July 2024. The company’s balance sheet shows net liabilities of £17,200 and negative working capital of £23,600, indicating a weak financial position and limited buffer to meet short-term obligations. The absence of a profit and loss account and limited financial history complicate assessment of operational profitability and cash generation. Given the negative equity, current liabilities exceeding current assets by a significant margin, and the company’s infancy, it lacks demonstrated capacity to service debt or absorb financial shocks. Therefore, credit approval is not recommended at this stage without substantial improvement or additional security.

2. Financial Strength:
   The balance sheet reveals fixed assets of only £6,400 and current assets of £27,627 against current liabilities of £51,227, resulting in net current liabilities of £23,600. Shareholders’ funds are negative at £17,200, reflecting accumulated losses or funding shortfalls since incorporation. The company employs 4 people, which is consistent with its micro status, but this scale limits economies and financial resilience. The micro-entity reporting regime and exemption from audit mean less financial transparency and assurance on reported figures. Overall, the financial strength is weak, with solvency concerns apparent from the negative net assets and working capital deficiency.

3. Cash Flow Assessment:
   Current liabilities exceed current assets by a sizable margin, indicating potential liquidity stress. The company’s available cash and receivables (part of current assets) are insufficient to cover short-term creditors. Without visibility on cash flow from operations or profitability (profit and loss statement not filed), it is challenging to confirm ongoing liquidity support. The negative working capital position suggests reliance on additional funding or credit from suppliers to sustain operations. This poses risk for timely repayment of any bank credit and raises concerns about the company’s ability to meet ongoing financial commitments.

4. Monitoring Points:

• Improvement in net current assets and positive working capital generation
• Filing of profit and loss account to assess profitability trends
• Changes in net assets and shareholders’ funds to gauge capital injections or operational results
• Management actions to reduce current liabilities or increase current asset liquidity
• Regular updates on cash flow position and any new financing arrangements
• Director’s ongoing commitment and any external support or guarantees