DCW ENGINEERING LTD

Executive Summary

DCW Engineering Ltd is a micro-enterprise with minimal equity and a tight working capital position. While current assets cover short-term liabilities, the presence of significant long-term creditors and limited operational scale warrants a cautious credit approach. Credit approval is recommended only with conditions such as director guarantees and clear cash flow assurances to mitigate risk.

DCW ENGINEERING LTD - Analysis Report

Company Number: SC719395

Analysis Date: 2025-07-20 11:23 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   DCW Engineering Ltd is a very small micro-entity, recently incorporated in 2022, with minimal equity and a net asset position barely above zero (£100). The company shows signs of extending longer-term liabilities (£27k after one year) which raises concern about debt structure. While the current assets exceed current liabilities, working capital remains tight and the net assets are marginal. There is only one employee (director) who also owns 75-100% shares, reflecting a closely held business with limited management depth. Given the limited financial history, minimal capital buffer, and reliance on director funding, credit approval should be conditional on obtaining additional assurances such as personal guarantees or clear cash flow projections.

2. Financial Strength:
   The balance sheet reveals a very small fixed asset base of £20,826, likely equipment related to its transport repair activity, against total liabilities close to £27,080 after one year. Current assets of £8,507 cover short-term liabilities of £2,153, yielding a positive net working capital of £6,355, which is an improvement compared to prior years. However, the substantial creditor balance falling due after more than one year indicates the company may have taken on longer-term debt or finance arrangements which could strain future liquidity. The net asset base is nominal, indicating little equity cushion to absorb adverse trading outcomes.

3. Cash Flow Assessment:
   With only one employee and small current asset balances, cash generation capacity appears very limited. The decline in current assets from £11,594 in 2024 to £8,507 in 2025, coupled with the increase in fixed assets, suggests capital expenditure has been funded possibly by taking on longer-term debt. The company’s working capital position has improved but remains fragile. Lack of detailed profit and loss data and absence of audit reduce visibility on operational cash flows, making liquidity risk higher. Monitoring cash inflows and outflows closely is essential.

4. Monitoring Points:

• Track changes in long-term liabilities to ensure debt service capacity is sustainable.
• Monitor working capital trends and current ratio to avoid liquidity stress.
• Review director’s financial support and any contingent liabilities.
• Evaluate business growth or contracts secured to assess revenue stability.
• Observe compliance with filing deadlines and any changes in director or ownership structure.