TRADE AND TRADE LTD

Executive Summary

Trade and Trade Ltd, a newly formed retail and wholesale business, demonstrates a fragile financial position with negative working capital and limited net assets. While the business is operational with no filing issues, liquidity constraints pose repayment risks. Conditional credit approval is recommended, contingent on close monitoring of cash flow improvements and timely creditor payments.

TRADE AND TRADE LTD - Analysis Report

Company Number: 14774687

Analysis Date: 2025-07-29 20:52 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Trade and Trade Ltd is a newly established private limited company (incorporated April 2023) operating in retail and wholesale trade sectors. The company shows a modest net asset base (£11.8k) but currently has negative working capital (-£13.9k), meaning current liabilities exceed current assets. This liquidity shortfall poses a risk for short-term obligations and indicates potential cash flow constraints. However, the company is active, has no overdue filings, and is controlled fully by a single director with clear ownership. The modest scale and short trading history limit confidence, so credit approval should be conditional on monitoring liquidity improvements and maintaining timely payments.

2. Financial Strength:
   The balance sheet shows tangible fixed assets of £25.7k and inventories of £18.95k, supported by debtors of £15k and cash of £7.5k. Total current liabilities amount to £55.3k, dominated by trade and other creditors. The negative net current assets indicate stretched short-term finances, although the company retains positive net assets. Shareholders’ funds are low at £11.8k, reflecting the early stage of the business. The capital base is minimal (£100 share capital), and the company’s financial position is fragile but not insolvent.

3. Cash Flow Assessment:
   Cash at bank is £7.5k, insufficient to cover current liabilities of £55.3k, suggesting reliance on debtor collections and inventory turnover to meet obligations. Debtors of £15k represent expected inflows, but the timing and collectability are unknown. The director’s remuneration of £45.7k indicates significant cash outflow in the first year, which may pressure liquidity. Negative working capital requires close management of payables and receivables for operational cash flow sufficiency.

4. Monitoring Points:

• Track improvements in working capital and liquidity ratios in subsequent filings.
• Monitor debtor aging and cash collection efficiency.
• Watch trade creditor aging for any delayed payments or supplier pressure.
• Assess revenue growth and gross margin trends to ensure sustainable cash inflows.
• Review director remuneration and related party transactions for cash flow impact.
• Confirm compliance with future filing deadlines and absence of overdue accounts.