SHEPPARD BUILDERS LTD

Executive Summary

Sheppard Builders Ltd is a recently established micro-entity showing some growth in assets and equity but has negative working capital indicating short-term liquidity risk. The company’s ability to service debt depends on improving cash flow management and maintaining strict control over payables and receivables. Credit approval is recommended on a conditional basis with close monitoring of liquidity and compliance metrics going forward.

SHEPPARD BUILDERS LTD - Analysis Report

Company Number: 13939357

Analysis Date: 2025-07-29 20:17 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Sheppard Builders Ltd is a micro-entity with limited trading history, incorporated in 2022. The company shows growth in fixed and current assets and improved shareholder funds over the last two years, indicating some progress. However, current liabilities exceed current assets, resulting in negative net working capital, which raises concerns regarding short-term liquidity and ability to meet immediate obligations. Given these factors and the limited financial history, credit approval is possible but should be conditional on tighter monitoring and possibly secured lending or guarantees.

2. Financial Strength:

• Fixed assets have increased modestly from £23,139 to £25,310, reflecting some investment in long-term resources.
• Shareholders’ funds improved significantly from £5,811 in 2023 to £15,551 in 2024, which is a positive sign of retained earnings or capital injection.
• However, the company is showing negative net current assets: £37,893 (current assets) minus £46,506 (current liabilities) = -£8,613 working capital at 2024 year-end. This implies the company may face difficulties covering short-term debts without additional funding or cash inflows.
• The balance sheet overall suggests a relatively weak liquidity position but stable equity base for a micro-entity.

3. Cash Flow Assessment:

• The negative working capital indicates potential cash flow strain.
• With only one employee and small asset base, operating expenses are likely modest, but the company’s ability to convert receivables and manage payables effectively is critical.
• No cash or cash equivalents are explicitly disclosed, but current assets likely include trade receivables and some cash.
• No audit or cash flow statement is provided, limiting visibility.
• Credit terms with suppliers and debtor collection performance should be reviewed carefully before extending credit.

4. Monitoring Points:

• Monitor liquidity ratios closely (current ratio and quick ratio) to detect improvements or worsening in short-term financial health.
• Watch progression in net assets and shareholder funds to confirm growing equity base.
• Track timely filing of accounts and confirmation statements to ensure compliance and transparency.
• Observe any significant changes in director or shareholder control that may impact governance or financial stability.
• Assess trading performance and cash flow statements when available for a fuller picture of operational efficiency.