MEHTAWISE LTD

Executive Summary

Mehtawise Ltd is currently financially weak with negative equity and net current liabilities, reflecting liquidity challenges and potential operational losses in its second year. The company’s reduced cash balances and working capital deficit raise concerns about its ability to service debt or meet short-term obligations. Credit extension is not recommended unless significant improvements in financial position or capital support are demonstrated.

MEHTAWISE LTD - Analysis Report

Company Number: 14262211

Analysis Date: 2025-07-29 20:03 UTC

1. Credit Opinion: DECLINE
   Mehtawise Ltd shows signs of financial distress as of the most recent accounts. The company’s net current liabilities of £2,400 and negative shareholders’ funds indicate an erosion of equity and working capital deficiency. While the company is micro-sized and relatively new (incorporated in 2022), the decline from a positive net current asset position and equity in 2023 to a deficit in 2024 raises concerns about its ability to meet short-term obligations and service any debt. The negative working capital and reliance on director loans (which were repaid during the year) suggest limited external financial support and liquidity constraints. Without evidence of profitable operations or improved cash flows, extending credit would carry a high risk.

2. Financial Strength:
   The balance sheet reveals weak financial health. Current assets decreased significantly from £7,527 in 2023 to £2,753 in 2024, while current liabilities remained relatively stable, causing a net current liability position of £2,400. Shareholders’ funds decreased from a positive £100 to a negative £2,400, reflecting accumulated losses or insufficient capital injection. The company has no fixed assets, indicating no tangible long-term security for creditors. The negative equity suggests that the company’s liabilities exceed its assets, undermining financial stability.

3. Cash Flow Assessment:
   Cash at bank dropped from £5,656 to £1,859, illustrating a significant reduction in liquidity. Debtors also decreased, which could indicate either improved collections or reduced sales, but overall current assets fell steeply. The company had director loans outstanding at the start of the year, repaid during the year, which implies temporary internal funding but no external credit facilities. The negative net working capital means the company does not have sufficient short-term assets to cover immediate liabilities, posing a liquidity risk and limiting operational flexibility.

4. Monitoring Points:

• Track subsequent cash flow trends and liquidity levels to assess if the working capital position improves.
• Monitor profitability metrics and turnover growth to determine if the company can rebuild equity.
• Keep watch on director loan balances or other related party transactions that may affect financial stability.
• Review any new capital injections or credit lines that could strengthen the balance sheet.
• Evaluate management actions to control costs and improve cash collections.