SCOTT HOBBS INVESTMENTS LTD

Executive Summary

Scott Hobbs Investments Ltd has acquired a significant investment property but is currently experiencing severe liquidity pressure due to a large increase in short-term liabilities and declining cash balances. The company’s financial strength is moderate but cash flow constraints and negative working capital elevate credit risk. Credit approval would require strong mitigating factors such as secured collateral or plans to reduce liabilities and improve liquidity.

SCOTT HOBBS INVESTMENTS LTD - Analysis Report

Company Number: SC683066

Analysis Date: 2025-07-29 19:23 UTC

1. Credit Opinion: DECLINE
   Scott Hobbs Investments Ltd shows significant deterioration in liquidity and working capital management over the past year. The company’s current liabilities have surged from £39,741 in 2023 to £227,106 in 2024, while current assets have dropped from £158,650 to £81,995. This has resulted in a large negative net current asset position (£-145,111) for 2024 versus a positive £118,909 in 2023, indicating potential cash flow stress. Despite holding an investment property valued at £263,450, the company’s ability to meet short-term obligations from liquid resources is weak. The absence of staff and reliance solely on directors may also limit operational resilience. No audit was performed, and financial controls appear limited. Given the sharp increase in short-term liabilities and negative working capital, credit exposure presents a material risk. Approval for new credit would be conditional on clear plans to reduce short-term liabilities and improve liquidity or additional security.

2. Financial Strength:
   The company’s net assets remain positive at £118,339, largely unchanged from £118,909 the prior year, reflecting the investment property acquisition. However, the balance sheet shows a historical lack of operating assets and reliance on investment property for value. The spike in current liabilities in 2024 (£227k) versus prior years (£39k) is unexplained in detail but materially impacts financial strength. The share capital remains minimal (£100), and profit and loss reserves are stable but not growing, pointing to limited retained earnings or profitability. Overall, the company’s financial strength is moderate but undermined by liquidity mismatches and short-term creditor pressure.

3. Cash Flow Assessment:
   Cash decreased from £158,117 in 2023 to £81,328 in 2024, indicating cash outflow despite acquiring an investment property. Debtors remain negligible (£667), so cash inflow from trade is minimal. The company’s current liabilities exceed liquid assets by a large margin, signaling potential cash flow difficulties in meeting obligations as they fall due. Negative net current assets and increased short-term creditors suggest reliance on external financing or delayed payments. Without additional cash injections or refinancing, the company’s immediate liquidity risk is high.

4. Monitoring Points:

• Monitor quarterly cash flow statements to detect ongoing liquidity trends.
• Track current liabilities for further increases or repayment progress.
• Review investment property valuations regularly to assess collateral value.
• Watch for any overdue filings or director changes that might indicate distress.
• Assess the company’s ability to generate operating cash flows or secure external funding.
• Review any related party transactions or guarantees given by directors.