Company Number: SC691347

Analysis Date: 2025-07-20 13:50 UTC

1. Credit Opinion: CONDITIONAL APPROVAL

TOM FOOTTIT CARPENTRY LTD is a micro-entity operating in specialised construction activities. The company has maintained positive net current assets and net assets over the last few years, indicating a basic level of financial stability. However, there is a noticeable decline in net assets from £4,767 in 2023 to £2,184 in 2024, primarily due to an increase in accruals and deferred income (£1,725 in 2024 from £500 in 2023) and a reduction in fixed assets and total assets less current liabilities. While liquidity remains positive, the decline in equity and increase in short-term liabilities suggest some pressure on working capital. Given the small scale of operations, single-employee status, and limited share capital (£100), the credit facility should be approved with conditions such as regular monitoring of cash flow and working capital, and potentially restricting the facility size to match the company’s turnover and asset base.

2. Financial Strength:

• The company’s fixed assets decreased to £2,594 from £3,459, indicating possible asset disposals or depreciation.
• Current assets increased to £6,363 from £3,100, driven likely by higher receivables or cash balances.
• Current liabilities have risen significantly to £5,048 from £1,292, which raises questions about short-term obligations and payment terms.
• Net current assets remain positive at £1,315, but have declined from £1,808.
• Total net assets declined from £4,767 to £2,184, indicating equity erosion.
• Shareholders’ funds are modest but positive, showing the company remains solvent.

Overall, the balance sheet is stable but shows signs of tightening liquidity and reduced equity cushions.

3. Cash Flow Assessment:

• The company’s net current assets show a positive working capital position, which is a good indicator of short-term liquidity.
• However, the significant increase in current liabilities versus current assets in 2024 compared to 2023 suggests that payables or short-term borrowings have increased substantially.
• The increase in accruals and deferred income could indicate delayed revenue recognition or advance payments, which may affect cash flow timing.
• With only one employee and limited operational scale, cash flow volatility could be high.
• No direct cash flow statement is provided, but the working capital changes imply the need for close cash flow monitoring to ensure timely debt servicing.

4. Monitoring Points:

• Watch current liabilities growth relative to current assets to ensure working capital remains positive.
• Track accruals and deferred income trends, as rising amounts may mask underlying cash flow issues.
• Monitor net assets and equity to detect any further erosion that could threaten solvency.
• Ensure timely filing of accounts and confirmation statements to maintain compliance.
• Assess the director’s ongoing involvement and capacity to manage financial affairs prudently given the micro scale operation.
• Review actual cash flow statements and bank statements periodically if credit facilities are extended.