JD MOTORWORKS LTD

Executive Summary

JD Motorworks Ltd shows modest growth in net assets but has significant working capital deficits and declining cash balances, raising liquidity concerns. Credit approval should be conditional on improved liquidity management and regular financial monitoring. The company’s reliance on director loans and increasing creditors warrants cautious oversight to mitigate short-term repayment risks.

JD MOTORWORKS LTD - Analysis Report

Company Number: 13807973

Analysis Date: 2025-07-29 18:46 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   JD Motorworks Ltd is a recently established company (incorporated Dec 2021) operating in vehicle maintenance and repair. Its current financial position shows net assets of £9,225 as of Dec 2023, up from £1,217 the prior year, indicating some improvement. However, the company exhibits significant working capital deficits with net current liabilities of £63,076, worsening from £44,794 in 2022. This negative working capital suggests liquidity strain and potential difficulties meeting short-term obligations. The presence of a substantial director’s loan (£43,989) signals reliance on related-party funding. Given these factors, credit approval should be conditional on improved liquidity monitoring, possible additional security, and regular review of debtor collections and creditor terms.

2. Financial Strength:
   The balance sheet shows total fixed assets of £72,301 including £25,000 goodwill and £47,301 tangible assets, reflecting investment in plant, machinery, and some intangible value. The company’s net assets remain positive but modest. The worsening net current liabilities indicate an unfavorable short-term financial structure. Shareholders’ funds increased from £1,217 to £9,225, reflecting retained earnings growth, but remain low in absolute terms. The capital structure is highly dependent on director loans, which could affect creditor priority in insolvency scenarios.

3. Cash Flow Assessment:
   Cash at bank declined from £68,605 in 2022 to £37,388 in 2023, showing a reduction in liquidity reserves. Trade debtors increased from £23,666 to £35,617, which may indicate slower cash collection or increased sales on credit. Trade creditors rose markedly to £40,581 from £10,269, signaling extended payment terms or cash flow constraints. The net current liabilities position and declining cash suggest that the company may face challenges in meeting immediate liabilities without further external funding or improved working capital management.

4. Monitoring Points:

• Monitor monthly cash flow closely for signs of liquidity stress.
• Watch debtor aging and collection effectiveness to ensure receivables convert timely to cash.
• Track creditor payment terms and outstanding balances to avoid supplier disputes or legal action.
• Review director loan account changes and assess risk associated with related-party funding.
• Observe profitability trends in future accounts to confirm business sustainability.
• Confirm timely submission of statutory filings and adherence to financial covenants if any.