LIQUOR HUB LTD

Executive Summary

Liquor Hub Ltd presents a weak credit profile marked by minimal net assets, high gearing, and no cash reserves, raising serious concerns about its ability to service debt. Despite positive net current assets, the reliance on long-term debt and slow debtor collections undermine financial resilience. Credit approval is not recommended without significant operational or financial improvements.

LIQUOR HUB LTD - Analysis Report

Company Number: 14194314

Analysis Date: 2025-07-20 15:37 UTC

1. Credit Opinion: DECLINE
   Liquor Hub Ltd shows several credit concerns that weigh against approval. The company’s net assets have sharply eroded from £15,266 in 2023 to a marginal £2,576 in 2024, indicating significant losses or write-downs. The substantial long-term creditor balance of £251,732 exceeds net assets by a wide margin, suggesting heavy reliance on external financing. Furthermore, the company has zero cash on hand at year-end, raising liquidity risk. Debtors have increased markedly but appear concentrated, with £45,000 due after more than one year, which may impair timely cash inflows. These factors imply limited ability to service debt or absorb adverse shocks without further capital injection or operational improvement.

2. Financial Strength:
   The balance sheet structure reveals a weak equity base of just £2,576 against total assets of approximately £257k, indicating high gearing and limited financial buffer. Fixed assets (mainly goodwill at £207k) dominate but have been amortised, reducing their net book value. Current assets exceed current liabilities by £43,408, which is positive, but the absence of cash and a large portion of debtors being long-term reduce effective liquidity. The large portion of creditors due after one year (£251,732) suggests significant long-term obligations likely relating to loans or deferred payables, which strain financial flexibility.

3. Cash Flow Assessment:
   Liquidity is a key concern. The company holds no cash at the balance sheet date, relying on £50,000 in debtors and £71,183 in inventory to fund operations. The increase in debtors, especially the portion due after one year, may delay cash conversion cycles. Current liabilities remain high at £77,775, including bank loans and overdrafts of £25,067, indicating ongoing financing needs. The limited number of employees (2) suggests a small-scale operation, but working capital management appears tight. Without positive cash flows or infusion of cash, the company may struggle to meet short-term obligations.

4. Monitoring Points:

• Monitor cash generation closely: zero cash at year-end is a red flag.
• Track debtor collection effectiveness and aging, especially long-term receivables.
• Watch creditor repayment schedules and any covenant compliance on long-term debt.
• Review profitability trends and goodwill amortisation impact on net assets.
• Assess any plans for capital injection or restructuring to bolster equity and liquidity.