INSPECTION TECH LIMITED

Executive Summary

Inspection Tech Limited exhibits significant financial deterioration over the last year, with negative net assets and working capital deficits undermining its creditworthiness. The company currently lacks sufficient liquidity and capital strength to support new credit without conditions. Close monitoring of cash flows and management actions to restore financial stability is recommended before reconsidering credit facilities.

INSPECTION TECH LIMITED - Analysis Report

Company Number: 12497549

Analysis Date: 2025-07-29 13:45 UTC

1. Credit Opinion: DECLINE
   Inspection Tech Limited's latest financials to 31 March 2024 show a significant deterioration in financial position with net liabilities of £39,924 and negative net current assets of £22,513. This indicates an inability to meet short-term obligations from current assets, raising concerns over liquidity and ongoing operational viability. The prior year showed a marginal positive net asset position of £53, but the rapid decline in one year suggests worsening financial health and potential cash flow stress. The company has no significant equity buffer and appears increasingly reliant on creditor financing. Given these factors and the micro-entity scale with limited capital, the company currently lacks sufficient financial strength to support new or increased credit facilities without mitigating conditions.

2. Financial Strength:
   The balance sheet reveals fixed assets of only £7,564 and a sharp drop in current assets from £24,881 to £14,051 year-on-year. Current liabilities increased markedly from £12,086 to £37,737, primarily short-term debts or payables, pushing net current assets into negative territory. Long-term creditors remain £24,000, unchanged but adding to overall liabilities. Shareholders funds turned negative from a small positive amount, reflecting accumulated losses. The company’s equity erosion and negative net assets undermine solvency and capital adequacy, suggesting weak financial resilience.

3. Cash Flow Assessment:
   Negative net current assets imply a working capital deficit, raising immediate liquidity concerns. The decrease in current assets and increase in current liabilities suggest cash outflows exceeding inflows, or delayed receivables collection and/or increased payables. Without disclosed cash flow statements, this working capital shortfall indicates potential difficulties in meeting short-term obligations such as supplier payments, payroll, and operational expenses. The company’s ability to generate positive operating cash flows or secure additional financing is critical but currently uncertain.

4. Monitoring Points:

• Monthly monitoring of cash flow and working capital movements to detect early liquidity stress
• Timely review of debtor collections and creditor payment terms to improve cash conversion cycle
• Watch for any overdue filings or further deterioration in net assets in upcoming accounts
• Management’s plans to restore profitability and strengthen equity base, including cost control and revenue growth strategies
• Any changes in director or ownership that might affect governance and financial stewardship