MBW PROJECTS LIMITED

Executive Summary

MBW Projects Limited is a startup construction company with a positive equity base but currently strained liquidity due to significant short-term liabilities. The company posted a profit in its first period but requires close cash flow monitoring and controlled lending conditions. Lending can be considered with safeguards given limited operating history and working capital deficits.

MBW PROJECTS LIMITED - Analysis Report

Company Number: 15702989

Analysis Date: 2025-07-19 12:42 UTC

1. Credit Opinion:
   CONDITIONAL APPROVAL. MBW Projects Limited is a newly incorporated business (May 2024) operating in domestic building construction. Although the company shows a net asset positive position and has generated a profit in its first financial period, it currently has significant net current liabilities (£47,336) driven by short-term obligations notably hire purchase contracts and tax/VAT liabilities. This weak short-term liquidity requires cautious lending with conditions such as regular monitoring and potentially a cap on working capital facilities. The directors' professional background as carpenters aligns with the business sector, but there is limited financial history to fully assess management quality and business resilience.

2. Financial Strength:
   The balance sheet reflects £68,841 in tangible fixed assets (plant and machinery) and total net assets of £21,505. The company’s equity is positive, supported by retained earnings of £21,505 after accounting for dividends paid of £114,000 against a profit of £135,505. However, the substantial current liabilities (£80,237), including hire purchase debt (£32,462) and tax liabilities, create a working capital deficit, indicating potential liquidity stress. The relatively high fixed asset base provides some security but these are less liquid and may not cover short-term debts if cash flow deteriorates.

3. Cash Flow Assessment:
   Cash at bank stands at £27,311, which is insufficient to cover current liabilities of £80,237, leading to a net current liabilities position of £47,336. Debtors amount to £5,590, contributing modestly to short-term liquidity. The presence of hire purchase debt suggests ongoing cash outflows for asset financing. Cash flow management will be critical as the company ramps up operations, especially to meet tax and VAT obligations promptly. The payment of large dividends early on may further constrain liquidity.

4. Monitoring Points:

• Monthly cash flow and liquidity position to ensure current liabilities can be met on time.
• Trends in working capital, particularly debtor collection and inventory levels (if any).
• Management of hire purchase obligations and any new financing arrangements.
• Profitability trends in subsequent accounts to confirm sustainable earnings growth.
• Directors’ adherence to prudent dividend policy aligned with cash generation.
• Timely filing of accounts and confirmation statements to maintain regulatory compliance.