CMYUK LIMITED
Company number 04416660 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Credit Analysis: CMYUK LIMITED
1. Credit Opinion: CONDITIONAL
Reasoning: CMYUK is a long-established, profitable distributor with consistent growth in net assets and turnover. However, the balance sheet carries significant leverage (liabilities-to-equity ratio of approximately 6.7:1) with a thin equity cushion of £663k against total assets of £5.25M. Cash reserves are volatile—dropping to £19 in 2023 before recovering—and working capital, while positive, provides limited headroom against current liabilities of £4.44M. Credit can be extended but with appropriate covenants and monitoring given the structural leverage and cash volatility.
2. Financial Strength
Balance Sheet Composition (March 2026): | Item | Amount | % of Total Assets | |-------|--------|-------------------| | Fixed Assets | £80,772 | 1.5% | | Inventories | £2,074,221 | 39.5% | | Debtors | £3,135,490 | 59.7% | | Cash | £40,080 | 0.8% | | Total Assets | £5,249,791 | 100% | | Current Liabilities | (£4,438,969) | | | Long-term Liabilities | (£208,230) | | | Provisions | (£20,193) | | | Net Assets | £663,171 | |
Key Observations: - Asset-heavy current position: 99.3% of assets are current, dominated by debtors (59.7%) and inventory (39.5%). This is typical for a distributor but creates concentration risk. - Minimal fixed asset base: Only £80k in property, plant and equipment suggests the business operates from leased premises and relies on consignment or vendor-financed equipment. - Leverage is structurally high: Liabilities represent 84.6% of total assets. The equity base (£663k) provides limited absorption capacity for losses. - Gearing trend: Net assets have grown from £257k (2017) to £663k (2026), demonstrating consistent retained earnings accumulation. This positive trajectory partially offsets the high leverage concern. - Share capital is negligible: Only £2,000 in share capital with £99,000 share premium indicates minimal shareholder investment; growth has been funded through retained earnings and trade creditors.
3. Cash Flow Assessment
Working Capital Analysis: | Metric | March 2026 | April 2025 | Direction | |--------|-----------|-----------|-----------| | Net Current Assets | £810,822 | £864,369 | ▼ Declining | | Current Ratio | 1.16:1 | 1.20:1 | ▼ Tightening | | Cash | £40,080 | £97,850 | ▼ Significant decline | | Inventory | £2,074,221 | £2,019,842 | ▲ Marginal increase | | Debtors | £3,135,490 | £3,028,801 | ▲ Growing |
Cash Volatility Pattern: | Year | Cash | Commentary | |------|------|------------| | 2017 | £10,785 | Minimal reserves | | 2018 | £71,431 | Improvement | | 2019 | £28,502 | Drawdown | | 2020 | £469,979 | Peak (likely COVID-related government support or deferred payments) | | 2021 | £296,513 | Normalisation | | 2022 | £51,258 | Significant decline | | 2023 | £19 | Critical low | | 2025 | £97,850 | Recovery | | 2026 | £40,080 | Declining again |
Concerns: - Cash has hit near-zero twice in recent history (2017: £10,785; 2023: £19), indicating recurring liquidity stress. - Debtors are growing (£3.03M → £3.14M) while cash is declining, suggesting potential collection issues or extended credit terms to customers. - Working capital is being squeezed: Net current assets fell by £53k (6.2%) year-on-year. - Heavy reliance on trade creditors: The business appears to fund operations significantly through supplier credit. Any tightening of terms by suppliers could create immediate liquidity pressure.
Turnover Context (where available): - FY2023: £12.83M turnover with £19 cash - FY2024: £14.04M turnover (+9.4%) with £31.8k cash - The business generates substantial revenue but converts little to cash, suggesting thin margins or significant working capital absorption.
4. Monitoring Points
| Metric | Current Position | Threshold | Rationale |
|---|---|---|---|
| Current Ratio | 1.16:1 | Minimum 1.10:1 | Below this indicates working capital stress |
| Cash Balance | £40,080 | Minimum £50,000 | Near-zero cash positions have occurred twice; early warning critical |
| Debtor Days | ~81 days (estimated) | Maximum 90 days | Growing debtors with declining cash may signal collection problems |
| Net Current Assets | £810,822 | Minimum £600,000 | Declining trend needs monitoring; breach indicates deteriorating working capital |
| Retained Earnings | £562,171 | Positive required | Any loss period would erode thin equity cushion rapidly |
| Trade Creditor Payments | Unknown | Monitor for ageing | Business relies heavily on supplier finance; payment delays could trigger supply disruption |
Additional Monitoring Considerations: - Year-end change: The company moved from March 31 to April 30 year-end, then back to March 31. This unusual pattern warrants understanding—whether for commercial or tax reasons. - Director composition: Four directors including three PSCs (each 25-50% ownership) could create governance deadlock in stressed scenarios. Clarity on decision-making authority is advisable. - Inventory quality: At £2.07M (39.5% of total assets), inventory represents significant obsolescence risk for technology equipment. Ageing analysis should be requested. - HP/Lease commitments: The accounts reference hire purchase contracts. Total obligations should be quantified as they represent fixed charges that must be serviced.