WATERFALL LABS LTD

Executive Summary

Waterfall Labs Ltd is a small, financially stable software development startup with adequate liquidity and positive net assets. Given its early stage and modest scale, credit should be extended conditionally with close monitoring of cash flow, tax liabilities, and business growth indicators. The company’s current financial position supports short-term obligations but requires vigilance for evolving credit risk.

WATERFALL LABS LTD - Analysis Report

Company Number: 14460380

Analysis Date: 2025-07-29 15:57 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Waterfall Labs Ltd is a recently incorporated (Nov 2022) small private limited company engaged in business and domestic software development. The company shows positive net assets and working capital, reflecting a modest but stable financial position. However, the company's scale and limited financial history, along with modest net asset values (£21,372 as at Nov 2024), imply limited financial depth. Given the absence of reported profits or income statement data, and the relatively low current liabilities (£20,084), credit approval should be conditional on a clear repayment plan and regular monitoring of cash flow and receivables. The single director and 100% ownership concentration pose a concentration risk but also show clear management control.

2. Financial Strength:
   The balance sheet indicates the company has net current assets of £20,744 and net assets of £21,372, slightly down from £23,933 the prior year. Fixed assets are minimal (£837 net book value), reflecting low capital intensity. Current assets (~£40,828) are primarily cash (£35,284) with modest debtors (£5,544), suggesting good liquidity but small scale operations. Current liabilities (£20,084) mainly consist of taxation and social security liabilities (£16,831), which may reflect payroll or VAT obligations. Overall, the financial structure is sound for a micro/small company, but the small equity base limits its capacity to absorb shocks or fund growth without external resources.

3. Cash Flow Assessment:
   Cash holdings remain relatively stable (£35,284 vs £39,834 prior year), which supports working capital needs. Debtors have increased to £5,544 from £1,018, warranting credit control attention to avoid cash flow strain. The company’s current liabilities are covered comfortably by cash and receivables, indicating adequate short-term liquidity. However, reliance on cash reserves and limited asset base means cash flow monitoring is critical, especially as current liabilities include substantial tax and social security amounts. Absence of profit and loss data restricts deeper cash flow analysis.

4. Monitoring Points:

• Regular review of cash flow and debtor collections to ensure liquidity is maintained.
• Monitoring taxation and social security liabilities to avoid payment defaults or penalties.
• Watch for changes in net assets and working capital trends to detect any deterioration.
• Assess revenue and profitability development as future accounts become available.
• Director’s continued involvement and any changes in ownership or management structure.
• Any increases in borrowing or contingent liabilities that could strain financial resources.