Company Number: 13002308

Analysis Date: 2025-07-20 14:30 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   YAFO LIMITED demonstrates an improving financial position with a positive turnaround in shareholders’ funds from a cumulative deficit to a modest equity surplus of £8,867 in 2024. However, current liabilities still exceed current assets, resulting in a negative net working capital position that limits liquidity. The company operates in the competitive take-away and licensed restaurant sector with a stable employee base (~24 employees). The directors have maintained compliance with filing deadlines, indicating sound governance. Conditional approval is recommended subject to monitoring liquidity improvements and ensuring continued profitability.

2. Financial Strength:

• Shareholders’ funds improved significantly from a negative £12,551 in 2023 to a positive £8,867 in 2024, reflecting retained earnings or capital injection.
• Fixed assets slightly decreased to £39,627 but remain consistent, indicating stable investment in long-term resources.
• Current assets increased notably from £31,520 to £48,083, showing better short-term asset management.
• Current liabilities declined from £88,742 to £79,858 but still exceed current assets, indicating ongoing working capital pressure.
  Overall, the balance sheet shows recovery from prior losses but still reflects tight financial flexibility.

3. Cash Flow Assessment:

• The negative net current assets (working capital deficit) of approximately £31,775 (£48,083 - £79,858) suggests potential short-term liquidity challenges.
• The company’s ability to meet short-term obligations depends heavily on cash conversions of current assets and managing payables efficiently.
• The increase in current assets is a positive sign but must translate into actual cash inflows to service liabilities.
• No audit is present, so cash flow statements are unavailable; hence liquidity assessment is based on balance sheet proxies.
• Managing operational cash flow and possibly negotiating longer payment terms or securing short-term credit lines will be critical.

4. Monitoring Points:

• Liquidity ratios, especially current ratio and quick ratio, to track improvements in working capital.
• Profitability trends and net margin from future accounts to confirm sustainable earnings growth.
• Directors’ compliance with filing deadlines and governance to maintain regulatory standing.
• Any material changes in current liabilities or asset impairments that could affect solvency.
• Sector-specific risks such as market competition and economic impacts on discretionary food service spending.