K.TODD HANDCRAFTED LTD

Executive Summary

K.Todd Handcrafted Ltd is a newly established micro joinery business with limited trading history and modest net assets. The company shows a working capital deficit and low equity, indicating some liquidity and leverage risk. Conditional credit approval is advised with ongoing monitoring of cash flow, management accounts, and creditor payments to ensure financial stability and repayment capability.

K.TODD HANDCRAFTED LTD - Analysis Report

Company Number: SC746854

Analysis Date: 2025-07-20 14:30 UTC

1. Credit Opinion:
   CONDITIONAL APPROVAL. K.Todd Handcrafted Ltd is a micro private limited company recently incorporated in 2022, engaged in joinery installation. The company shows very modest net assets (£614) as of year-end 31 March 2024, with a significant portion of liabilities falling due after one year (£24,190). The balance sheet indicates some leverage and negative net current assets (-£5,480), which may constrain short-term liquidity. However, the company is operational, with an active website and a sole director/owner controlling 75-100% of shares and voting rights, suggesting strong control and commitment. The company’s financial history is short and limited in scale, with minimal trading data, so credit risk is moderate. Approval is recommended with conditions such as monitoring cash flow closely and requiring updated accounts or management information before increasing credit limits.

2. Financial Strength:
   The balance sheet shows fixed assets of £30,284, reflecting investment in equipment or property, which supports operational capacity. Current assets at £15,821 are insufficient to cover current liabilities of £21,301, resulting in a working capital deficit of £5,480, indicating potential liquidity risk. Total liabilities including long-term creditors amount to £45,491 (£21,301 + £24,190), against total assets of £25,418, resulting in very low net equity (£614). The financial structure is heavily reliant on external creditors or possibly director loans. Shareholders’ funds are minimal, reflecting limited retained earnings and a very early stage of profitability and capital accumulation.

3. Cash Flow Assessment:
   The negative net current assets point to a working capital shortfall, which could pressure cash flow for day-to-day operations. The company’s ability to convert fixed assets into cash quickly is limited, and the current liabilities exceed current assets by over 30%. Given the small size and micro entity status, cash flow management will be critical. Absence of detailed cash flow statements restricts full evaluation, but reliance on short-term creditor funding and limited cash reserves suggest potential liquidity constraints. The company should demonstrate improved cash flow management and possibly maintain a cash buffer or access to short-term financing.

4. Monitoring Points:

• Regular review of updated management accounts and cash flow forecasts to monitor liquidity trends.
• Watch for timely settlement of trade and creditor obligations to avoid defaults.
• Monitor any increase in long-term liabilities to assess leverage risks.
• Evaluate the company’s ability to grow sales and improve profitability in subsequent years.
• Keep track of director’s financial support or additional equity injections if required.
• Confirm continued compliance with filing deadlines and absence of any legal or regulatory issues.