DISTORTED CATERING LTD

Executive Summary

Distorted Catering Ltd is a recently established micro-entity in the licensed restaurant sector with negative net assets and significant working capital deficits as at July 2024. The company currently lacks financial strength and liquidity to support credit risk, leading to a decline recommendation. Future monitoring should focus on cash flow improvements and balance sheet stabilization before considering credit facilities.

DISTORTED CATERING LTD - Analysis Report

Company Number: 15004012

Analysis Date: 2025-07-29 13:54 UTC

1. Credit Opinion: DECLINE
   Distorted Catering Ltd is currently in a weak financial position with net liabilities of £8,104 and net current liabilities of £10,581 as of the latest accounts dated 31 July 2024. The company is newly incorporated (July 2023) and has not demonstrated profitability or positive net assets. The negative working capital indicates an inability to cover short-term obligations with current assets, raising concerns over liquidity and debt servicing capacity. Given the micro-entity scale and absence of audit, limited financial transparency adds to risk. The director is also the sole significant controller, which concentrates governance risk.

2. Financial Strength:
   The balance sheet shows minimal fixed assets (£3,929) and low current assets (£4,123) against current liabilities of £14,868, resulting in a net current liability position. The negative net assets and shareholders' funds reflect accumulated losses or start-up expenses not yet recovered. The capital base is minimal (£101 share capital), and the company relies on external funding or director support to meet obligations. The company's micro status indicates a small operation with limited scale economies or financial buffers.

3. Cash Flow Assessment:
   With current liabilities exceeding current assets by more than £10k, working capital is significantly negative, implying potential liquidity stress. There is no indication of cash reserves or positive cash flow generation from operations. The company's ability to convert assets to cash quickly or to generate sufficient operational cash flow to meet immediate liabilities is questionable. This weak liquidity position could impair timely repayment of any credit facilities.

4. Monitoring Points:

• Improvement in net current assets and movement towards positive working capital
• Evidence of operational cash flow generation and profitability in future trading periods
• Timely filing of accounts and confirmation statements to maintain transparency
• Changes in director or significant control that may affect governance or financial support
• Any external financing arrangements or capital injections improving solvency