Company Number: 13836945

Analysis Date: 2025-07-20 11:36 UTC

1. Credit Opinion: DECLINE
   Catering Sutton Ltd shows significant financial distress with negative net current assets and shareholders' funds, indicating insolvency concerns. The company has net current liabilities worsening from £19 to £20,461 within a year, reflecting a deteriorating liquidity position. The high level of current liabilities compared to very limited current assets and cash suggests an inability to meet short-term obligations reliably. Additionally, the company is very young (incorporated in 2022) with no reported profitability or positive equity build-up. Given these factors, extending credit without substantial guarantees or restructuring would be high risk.

2. Financial Strength:
   The balance sheet reveals a weak financial position. Current assets decreased from £20,410 to £8,377 mostly due to a drop in cash from £18,795 to £7,350 and reduced debtors. Current liabilities increased sharply from £20,429 to £28,838, driven largely by other creditors (£24,900) and taxation/social security liabilities (£3,938). Negative net current assets of £20,461 and negative equity (£20,561) indicate that the company is effectively insolvent on a going-concern basis. There are no fixed assets listed, and the company relies heavily on short-term funding. This fragile financial structure undermines its ability to absorb shocks or invest in growth.

3. Cash Flow Assessment:
   Cash holdings have declined significantly, which combined with rising liabilities suggests cash flow pressures. The company’s working capital is negative and worsening, indicating ongoing operational cash deficits or delayed payments to creditors. Trade debtors have halved, possibly indicating tighter credit control or reduced sales. The average employee count increased from 3 to 5, potentially adding to overhead costs without corresponding revenue growth data available. Overall, liquidity is strained, and without an improved cash flow or capital injection, the company risks defaulting on obligations.

4. Monitoring Points:

• Cash balances and liquidity ratios (current ratio, quick ratio) to detect further deterioration.
• Trends in creditors, especially tax and social security obligations, to avoid enforcement actions.
• Profitability and turnover development to assess business viability.
• Director changes and any related party transactions, given the recent change in controlling directors.
• Compliance with filing deadlines and any signs of late payments or insolvency proceedings.