TARRADALE HOME IMPROVEMENTS LTD

Executive Summary

Tarradale Home Improvements Ltd is a newly established company with a solid asset base and healthy cash reserves but faces short-term liquidity challenges evidenced by negative working capital. While the balance sheet shows positive net assets, cautious credit approval is recommended with conditions focused on monitoring cash flow management and operational profitability as the business stabilizes.

TARRADALE HOME IMPROVEMENTS LTD - Analysis Report

Company Number: SC746477

Analysis Date: 2025-07-20 18:15 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Tarradale Home Improvements Ltd is a recently incorporated SME operating in the construction installation sector. The company shows positive net assets but currently demonstrates a working capital deficit, indicating short-term liquidity pressure. Given the company’s young age with only one financial year reported, credit approval should be conditional on ongoing monitoring of cash flow, debtor collections, and creditor management to ensure it can meet its short-term obligations without distress. The directors appear engaged and have maintained timely statutory filings.

2. Financial Strength
   The company’s net assets stand at £51,391, supported primarily by fixed assets (£86k) and a strong cash position (£163k). However, the net current assets are negative at approximately £-13k, as current liabilities (£199k) slightly exceed current assets (£186k). The deferred tax liability of £21k reduces total net assets but does not impact immediate liquidity. Shareholder equity is modest, reflecting the recent start and limited retained earnings. Capital structure is equity-based with minimal debt disclosed. Overall, the balance sheet is stable but reflects the early investment phase.

3. Cash Flow Assessment
   Cash at bank (£163k) exceeds trade creditors and other short-term creditors combined, which is positive for liquidity. However, the negative net current assets highlight that current liabilities are sizeable relative to current assets, primarily due to other creditors (£133k) and tax liabilities (£29k). The company paid an interim dividend of £51k in its first year, which could have impacted liquidity. The absence of audit and limited historical data restricts deeper cash flow analysis, but the strong cash balance supports operational needs for now.

4. Monitoring Points

• Watch working capital trends closely in future accounts to ensure improvement or stabilization of net current assets.
• Monitor debtor aging and creditor payment terms to avoid liquidity squeeze.
• Track profitability and retained earnings development as the company matures beyond its start-up phase.
• Review dividend policy to ensure it does not compromise cash reserves needed for operations and growth.
• Keep an eye on lease commitments totaling £9k over 5 years and their impact on cash flow in an economic downturn.