CHOO CHOO LOCO LTD

Executive Summary

Choo Choo Loco Ltd is a very small transport company showing some equity improvements but with ongoing negative working capital and limited liquidity. Credit approval is recommended only with conditions such as enhanced monitoring and potential director guarantees. The company's young age and micro-entity status suggest limited financial resilience requiring careful cash flow oversight.

CHOO CHOO LOCO LTD - Analysis Report

Company Number: 13534810

Analysis Date: 2025-07-29 17:08 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Choo Choo Loco Ltd shows improvement in net assets over recent years, indicating some equity growth. However, the company suffers from persistent net current liabilities (negative working capital), which raises concerns about short-term liquidity and ability to meet near-term obligations. The micro-entity filing and minimal staff (1 employee) suggest limited scale, which may impact resilience. Given the company’s young age (incorporated 2021) and improving but still fragile financial position, credit approval should be conditional on monitoring cash flow closely and obtaining additional security or personal guarantees from directors.

2. Financial Strength:
   The balance sheet shows fixed assets around £52k and shareholders’ funds rising from a negative £281 in 2021 to £27.7k in 2024, reflecting accumulation of some retained earnings or capital injections. However, current liabilities exceed current assets by £24.7k in 2024, although this is an improvement from £47.4k in 2022. The company is still reliant on short-term borrowings or creditor financing, which suggests limited financial buffer. The absence of long-term liabilities is positive but the small equity base limits capacity for growth or absorbing financial shocks.

3. Cash Flow Assessment:
   Current assets are minimal (£5.3k), mainly cash or short-term receivables, which is insufficient to cover current liabilities of £30k. This negative working capital position indicates potential liquidity strain. There is no detailed cash flow statement available, but the ongoing net current liability position implies the company may rely on director loans or external funding to meet obligations. The micro-entity status and small scale imply limited cash generation capability. Close attention should be paid to cash inflows from operations and creditor payment terms.

4. Monitoring Points:

• Track quarterly cash flow and working capital trends to ensure continued improvement in liquidity.
• Monitor accounts receivable aging and creditor payment behavior to assess operational efficiency.
• Review any director or shareholder loans or guarantees supporting working capital.
• Keep watch on turnover growth and profitability trends when available in future filings.
• Confirm timely filing of accounts and confirmation statements to avoid compliance risks.