SBS JEWELLERY LTD

Executive Summary

SBS JEWELLERY LTD is a small, newly formed jewellery retail and manufacturing business with positive working capital but minimal equity and significant long-term debt. The company shows initial financial stability but limited cash on hand and a high reliance on inventory. Credit approval should be conditional on careful monitoring of debt servicing, liquidity, and inventory management to ensure sustainable growth and repayment capacity.

SBS JEWELLERY LTD - Analysis Report

Company Number: 14672726

Analysis Date: 2025-07-29 16:30 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   SBS JEWELLERY LTD is a newly incorporated private limited company (since February 2023) operating in retail and manufacturing of jewellery. The company shows positive net assets and working capital, but the capital base is minimal (£2,602) and there is significant long-term borrowing (£32,274) relative to equity. The business is currently small scale with a single employee (the director) and modest trade debtors and cash balances. Given the early stage of operations and limited financial track record, credit facilities should be approved conditionally with limits aligned to working capital needs and close monitoring of cash flows and debt servicing ability.

2. Financial Strength:
   The balance sheet reflects total assets of £39,291 (fixed assets of £5,525 and current assets of £33,766). Current liabilities stand at £4,415, resulting in net current assets (working capital) of £29,351, which is a strong liquidity buffer. However, the company carries long-term liabilities of £32,274 primarily bank loans and other creditors, which significantly reduce net assets to £2,602. Shareholders’ funds are minimal at £2,601, indicating limited equity cushion. The company’s gearing is high, with debt far exceeding equity, but this may be typical for a start-up investing in inventory and fixed assets.

3. Cash Flow Assessment:
   Cash at bank is low at £316, and trade debtors are also very small (£250), showing limited immediate liquidity. The large stock holding (£33,200) represents the main current asset component, which may tie up cash and could be subject to slow-moving risks in retail jewellery. The significant positive net current assets indicate good short-term liquidity, but cash flow risk exists due to minimal cash reserves and reliance on inventory turnover. The company’s ability to meet short-term obligations appears adequate, but cash conversion cycles should be monitored closely to ensure liquidity is maintained.

4. Monitoring Points:

• Debt servicing capacity: Monitor repayments on £20,000 bank loan and other long-term creditors.
• Inventory turnover and stock ageing: High stock levels require efficient management to avoid obsolescence or cash flow strain.
• Cash balances and working capital trends: Ensure cash reserves grow in line with business to avoid liquidity crunch.
• Profitability development: As a start-up, track the move from initial losses to sustainable profits to improve equity base.
• Director and related party transactions: Given 75-100% ownership by one director, review for any related party exposures or capital injections.