Company Number: 14674764

Analysis Date: 2025-07-20 11:23 UTC

1. Credit Opinion: CONDITIONAL APPROVAL Squirrel Bars Ltd is a recently incorporated event catering company showing growth in net assets and shareholder funds over two years. However, the company currently demonstrates negative net working capital, indicating short-term liquidity pressure. The cash balance has improved substantially, which mitigates immediate concerns, but current liabilities remain high relative to current assets. Given the company’s early stage, limited operational history, and working capital deficit, credit approval should be conditional on regular monitoring of liquidity and trading performance. Additional security or personal guarantees may be advisable to manage risk.

2. Financial Strength: The company’s net assets increased from £14,440 in 2024 to £26,950 in 2025, reflecting retained earnings accumulation and modest fixed asset depreciation. Tangible fixed assets are primarily plant and machinery valued at £36,920. The balance sheet shows a positive equity base and no long-term liabilities reported, which supports solvency. However, the consistent negative net current assets (£-9,970 in 2025) reveal reliance on short-term financing or creditor support to fund operations. The increase in stock and cash balances is a positive sign of operational scale-up.

3. Cash Flow Assessment: Cash at bank increased from £13,606 to £40,777 year-on-year, improving liquidity significantly. Despite this, current liabilities rose to £56,247, exceeding current assets of £46,277, highlighting potential short-term cash flow strain. Trade creditors are relatively low (£3,633), but other creditors and tax liabilities are material (£43,623 and £8,991 respectively), which may be payable soon. The company should be encouraged to maintain strong cash flow forecasting and control creditor terms to avoid liquidity bottlenecks.

4. Monitoring Points:

• Monthly monitoring of cash flow and working capital position to ensure short-term obligations can be met.
• Assessment of debtor collections and stock turnover to improve net current asset position.
• Review trading profitability to confirm consistent retention of earnings and improved financial resilience.
• Watch for any overdue filings or director changes that might signal governance or operational issues.
• Evaluate credit exposure limits and consider collateral or personal guarantees given the early stage of the business.