MATTHEW 7 LTD

Executive Summary

MATTHEW 7 LTD shows chronic liquidity stress with negative working capital exceeding £87,000 and minimal equity. Despite stable fixed assets, the company lacks sufficient current assets to meet short-term liabilities, undermining its ability to service debt. Credit extension is not advisable without significant improvement in liquidity or external guarantees.

MATTHEW 7 LTD - Analysis Report

Company Number: SC679003

Analysis Date: 2025-07-29 20:23 UTC

1. Credit Opinion: DECLINE
   MATTHEW 7 LTD exhibits significant liquidity risk, with persistent and substantial net current liabilities (negative working capital) of approximately £87,000 as of the latest accounts. Although net assets have improved slightly to £7,065, this is largely driven by fixed assets rather than liquid resources. The company's inability to cover short-term liabilities with current assets raises concerns about its capability to meet debt obligations promptly. Given the negative working capital trend over multiple years and limited financial buffers, extending credit facilities would be high risk without meaningful collateral or external support.

2. Financial Strength:
   The balance sheet displays fixed assets valued at £94,390, which remain constant over the past five years, indicating no recent capital investment or disposals. However, current liabilities (~£98,000) consistently exceed current assets (~£10,836), resulting in negative net current assets of -£87,325 at the latest year-end. Shareholders’ funds remain minimal at £7,065, reflecting limited equity cushion. The micro-entity size and single director structure imply a small-scale operation with limited financial flexibility. Overall, the financial position is weak, with solvency marginally positive but liquidity severely constrained.

3. Cash Flow Assessment:
   The company’s negative working capital suggests ongoing cash flow challenges, as current liabilities significantly outstrip current assets. The increase in current assets from £6,277 to £10,836 year-on-year is modest and insufficient to offset the scale of short-term debts. The persistence of net current liabilities over multiple years indicates probable reliance on creditor financing or delayed payments, which is unsustainable under tighter credit conditions. There is no indication of cash reserves or positive operating cash flows, which raises concerns about the company’s ability to generate sufficient liquidity to service debts and operational needs.

4. Monitoring Points:

• Track current ratio and net current asset position to detect any worsening of liquidity.
• Monitor ageing of creditors and any overdue payables to assess payment discipline.
• Review fixed asset valuation for impairment or disposals that might affect net asset base.
• Watch for any director or shareholder injections of capital or external financing arrangements.
• Assess upcoming confirmation statement and accounts filing timeliness to ensure compliance and transparency.