M & L LOGISTIC SOLUTIONS LTD

Executive Summary

M & L Logistic Solutions Ltd is an early-stage freight transport business with minimal net equity and slightly negative working capital, relying on director loans for short-term funding. While showing some growth in trade receivables and fixed assets, liquidity constraints and tight cash flow warrant a cautious credit approach. Conditional approval is advised with stringent monitoring of cash flow dynamics and operational profitability.

M & L LOGISTIC SOLUTIONS LTD - Analysis Report

Company Number: 14035394

Analysis Date: 2025-07-29 18:51 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   M & L Logistic Solutions Ltd is a very young freight transport business with minimal net assets (£26) and slightly negative working capital (£-1,574). The company shows incremental growth in debtors and a small increase in fixed assets, but current liabilities slightly exceed current assets, indicating tight liquidity. Directors have extended loans to the company, which supports short-term funding but reveals reliance on insider financing. Given the company's youth, small scale, and working capital constraints, credit approval should be conditional on close monitoring of cash flow, receivables collection, and operating profitability development.

2. Financial Strength:
   The balance sheet exhibits very low net assets (£26) and negligible equity, reflecting a start-up phase with limited retained earnings (£24 in P&L reserve). Tangible fixed assets are modest (£1,955) and have decreased from prior year, consistent with early investment in equipment. Current liabilities marginally exceed current assets, resulting in a negative net current asset position, which may constrain the company’s ability to meet short-term obligations without additional funding. Director loans totaling £11,443 provide some financial buffer but indicate external borrowing limitations.

3. Cash Flow Assessment:
   Cash on hand has decreased from £27,646 to £10,810 despite an increase in debtors, suggesting cash conversion cycle issues or reinvestment in operations. Negative working capital signals potential liquidity pressure to cover immediate liabilities. The company must focus on improving debtor collections and maintaining sufficient cash reserves to service creditors. The limited cash and reliance on director loans highlight a need for careful cash flow planning to avoid payment delays.

4. Monitoring Points:

• Track cash balances and liquidity ratios monthly to ensure solvency.
• Monitor debtor aging to assess collection efficiency and credit risk exposure.
• Review operating margins and profitability trends to reduce reliance on director funding.
• Watch for any changes in current liabilities, especially creditor terms and short-term borrowings.
• Confirm timely filing of accounts and statutory returns to avoid compliance risks.
• Assess director loan balances and any plans for external financing to support growth.