STOVE INNOVATIONS LTD

Executive Summary

Stove Innovations Ltd has demonstrated a turnaround from net liabilities to positive net assets but still faces liquidity challenges with working capital deficits and low cash reserves. The company’s current financial position warrants conditional credit approval with close monitoring of cash flow, stock management, and debt servicing. Continued improvements in operational cash generation are critical to support ongoing credit facilities.

STOVE INNOVATIONS LTD - Analysis Report

Company Number: 13164415

Analysis Date: 2025-07-20 16:27 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Stove Innovations Ltd shows an improving financial position with positive net assets of £2,328 as of January 2024 compared to negative net assets in prior years. However, the company continues to exhibit weak liquidity with negative net current assets of £2,752 and limited cash reserves (£912). The company’s ability to service short-term obligations is constrained, and reliance on director loans and bank loans (including a new long-term bank loan of £3,179) suggests external funding is still necessary. Credit approval should be conditional on close monitoring of cash flow and working capital improvements, with limitations on credit exposure until liquidity strengthens.

2. Financial Strength:
   The company’s net assets have recovered from a deficit to a modest positive £2,328, reflecting some retained earnings (£2,318 P&L reserve). Fixed assets have decreased moderately but remain tangible and depreciated prudently. The balance sheet remains small-scale with minimal share capital (£10). The long-term bank borrowing introduced in 2024 improves capital structure but also adds fixed financial commitments. The balance sheet shows improving solvency but remains vulnerable due to high current liabilities (£76,939) exceeding current assets (£74,187).

3. Cash Flow Assessment:
   Current liabilities exceed current assets, producing a working capital deficit of £2,752. Although stock levels have increased significantly (from £28,746 to £71,650), this may tie up liquidity and risk obsolescence or slow turnover. Cash on hand remains low (£912), limiting the company’s immediate ability to meet short-term debts. Debtors are minimal (£1,625) and limited to VAT recoverable. The company relies on external financing (director loans of £2,881 and new bank loans) to manage cash flow deficits. Operating cash generation appears insufficient to cover liabilities without continued borrowing or capital infusion.

4. Monitoring Points:

• Liquidity ratios and working capital position to ensure short-term obligations can be met
• Stock turnover and ageing to avoid inventory obsolescence and further cash strain
• Director’s loan account movements and bank loan servicing to monitor financial leverage and refinancing risk
• Profitability trends and cash flow from operations in future accounts to evaluate sustainability
• Timely filing of accounts and confirmation statements to maintain regulatory compliance