Company Number: 12939428

Analysis Date: 2025-07-20 13:10 UTC

1. Credit Opinion: DECLINE
   Mersey Mechanical Ltd shows a concerning deterioration in financial health over the last financial year. The company moved from a positive net asset position (£646 in 2022) to a significant net liability position (-£23,399 in 2023). Current liabilities have nearly quintupled from £4,026 to £19,231, and total creditors including long-term have increased substantially, resulting in a negative working capital of -£9,065. Such a position indicates liquidity stress and inability to cover short-term obligations from current assets. Without clear evidence of improved revenue or cash flow, the risk of default on credit facilities is elevated.

2. Financial Strength:
   The balance sheet indicates weak financial strength. The company’s net assets have turned negative due to increased creditors and accruals, despite having a minimal share capital (£100 called up). The rise in liabilities outpaces current assets, and long-term creditors also increased, further eroding equity. The company is classified as a micro entity with only one employee, limiting operational scale and potential for quick turnaround.

3. Cash Flow Assessment:
   The negative net current assets position (-£9,065) signals working capital deficiency, which constrains the company’s ability to fund day-to-day operations without external financing. The drop in current assets from £17,083 to £10,166 alongside a steep increase in current liabilities is a red flag for liquidity strain. There is no indication of cash reserves or improved debtor collection to offset this. Cash flow stress suggests difficulty servicing existing debts or new credit.

4. Monitoring Points:

• Track subsequent trading performance and cash flow statements to assess if liquidity improves.
• Monitor creditor aging and any defaults or late payments.
• Watch for any capital injections or restructuring efforts to restore solvency.
• Review director actions and business plans for addressing the declining financial position.
• Confirm timely filing of future accounts and confirmation statements to ensure compliance and transparency.