JOHNNY L LIMITED

Executive Summary

Johnny L Limited is a very small management consultancy company showing signs of financial stabilization after initial losses. Despite recent improvements, the company’s limited working capital, reliance on a director loan, and historically negative equity present moderate solvency and liquidity risks. Ongoing close financial monitoring and further investigation into cash flow sustainability are recommended before considering investment.

JOHNNY L LIMITED - Analysis Report

Company Number: 14386222

Analysis Date: 2025-07-29 12:18 UTC

1. Risk Rating: MEDIUM
   The company shows some improvement in net current assets and shareholders’ funds in the latest year but remains very small with limited working capital. The director’s loan and reliance on director support indicate potential liquidity and solvency risks.

2. Key Concerns:

• Liquidity Constraint: Current assets of £1,849 only slightly exceed current liabilities of £1,789, leaving a very narrow margin (£60) for working capital as of 30 September 2024. Cash on hand is low at £989, which may constrain day-to-day operations.
• Reliance on Director Loan: There is an outstanding director loan of £860 which suggests external funding dependency within the company’s capital structure. This may signal inadequate operating cash flow.
• Negative Equity History: Although shareholders’ funds turned positive (£60) in 2024, the company was in negative equity position (£-1,913) for the prior two years. This recent turnaround is positive but still at a very low absolute level.

3. Positive Indicators:

• Improvement in Financial Position: The company moved from negative net current assets and shareholders’ funds in prior years to slightly positive in 2024, indicating some operational or financial improvement.
• Up to Date Compliance: No overdue filings or accounts are noted, and the company remains active and compliant with Companies House requirements, reducing regulatory risk.
• Clear Control and Governance: Single director and 100% shareholder John Litster provides clear accountability and control, which can be positive for streamlined decision-making.

4. Due Diligence Notes:

• Investigate the nature and terms of the director loan and assess the company's ability to repay or refinance this funding.
• Review the company’s cash flow projections and client contracts to understand the sustainability of its working capital and operating cash flows.
• Clarify the reasons for the previous negative equity and how the company has achieved recent improvement to assess sustainability.
• Confirm whether the company has any contingent liabilities or off-balance sheet obligations not reflected in the accounts.
• Validate the company’s revenue streams and client base given the small scale and limited employee count (1 person).