DMS CONTRACTS LTD

Executive Summary

DMS Contracts Ltd is a newly formed micro entity with a modest but positive net asset and working capital position, indicating minimal but adequate short-term financial stability. The company’s limited financial cushion and sole director control warrant cautious credit exposure with regular liquidity monitoring. Overall, credit approval is recommended with prudent limits and ongoing review of financial performance and cash flows.

DMS CONTRACTS LTD - Analysis Report

Company Number: 14525501

Analysis Date: 2025-07-20 14:08 UTC

1. Credit Opinion: APPROVE with caution.
   DMS Contracts Ltd is a very recently incorporated micro entity operating in the construction sector. The company demonstrates a positive net current asset position, albeit small, and has no overdue filings. The director holds full control, which suggests decision-making is centralized and potentially agile. However, the low absolute equity and minimal working capital indicate limited financial cushioning. Given the company’s young age and modest financial base, credit should be extended with prudent limits and ongoing review.

2. Financial Strength:
   The balance sheet shows net assets of £1,293 as of 31 December 2024, up slightly from £1,038 the previous year. Current assets (£32,948) marginally exceed current liabilities (£31,655), resulting in a net current asset position of £1,293. No fixed assets or long-term liabilities are reported, which is typical for a micro entity. The small equity base reflects limited retained earnings and capital injection since incorporation. Overall, the financial structure is very lean, with minimal buffer to absorb financial shocks or increased liabilities.

3. Cash Flow Assessment:
   Current assets are predominantly short-term and likely consist of cash and receivables, but specific cash balances are not disclosed. The near parity between current assets and liabilities indicates tight liquidity, with working capital just sufficient to meet short-term obligations. The company’s ability to generate positive cash flow from operations and maintain liquidity will be critical, especially given the construction industry’s potential for payment delays and upfront costs. Close monitoring of debtor days and creditor management is recommended.

4. Monitoring Points:

• Maintain close oversight of cash flow, focusing on liquidity ratios and timely collections.
• Monitor any growth in current liabilities that may outpace current assets.
• Watch for changes in shareholder funds and net assets to gauge profitability trends.
• Review director’s credit and legal standing periodically, given sole control by Daniel Mark Smith.
• Track industry conditions impacting construction sector credit risk and payment cycles.
• Ensure timely filing of statutory accounts to avoid compliance risks.