LINCOLN DECOR LTD

Executive Summary

Lincoln Decor Ltd has improved from a negative net position to modest positive net assets within two years, indicating a stabilizing business. However, limited asset base and working capital underline a fragile financial position requiring cautious credit exposure. Close cash flow and debtor management should be prioritized to support ongoing creditworthiness.

LINCOLN DECOR LTD - Analysis Report

Company Number: 14041704

Analysis Date: 2025-07-29 14:58 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Lincoln Decor Ltd has demonstrated a remarkable turnaround in its financial position over the past year, moving from significant net liabilities to positive net assets and net current assets. However, the company remains very small, with minimal asset base and limited current assets, including a negative trade debtor balance that may indicate accounting or timing issues. Credit exposure should be cautiously structured with conditions such as regular financial updates and possibly secured facilities given the limited tangible assets and working capital.

2. Financial Strength:
   The company’s balance sheet as of 30 April 2024 shows net assets of £1,216, a positive shift from a net liability of £5,622 in the previous year. Tangible fixed assets are minimal (£190), indicating limited collateral value. The current asset base is very low (£457), with cash at £589, but current liabilities are modest (£569), resulting in positive net current assets of £1,026. The improvement suggests the company has stabilized operations and begun generating retained profits. However, the overall financial strength is still weak due to the small scale and limited resource base.

3. Cash Flow Assessment:
   Cash balances have decreased sharply from £2,428 in 2023 to £589 in 2024, which warrants attention as it may constrain liquidity. The company’s working capital is positive but marginal, which implies limited buffer to meet short-term obligations. The negative trade debtor figure (£-132) is unusual and should be clarified, as it may represent overpayments or accounting timing rather than true liquidity. The absence of bank loans or overdrafts as of 2024 reduces financial risk but also indicates limited external funding. Close monitoring of cash flow cycles and creditor terms is recommended.

4. Monitoring Points:

• Maintain close watch on cash balances and working capital trends to ensure liquidity adequacy.
• Clarify the nature of negative trade debtors and assess any credit risk related to receivables or billing.
• Monitor profitability and retained earnings growth to support continued strengthening of net assets.
• Track creditor balances and payment practices to avoid liquidity strain.
• Review directors’ adherence to financial controls given rapid turnaround from prior loss position.