MINSKY MAGIC LIMITED

Executive Summary

Minsky Magic Limited shows signs of increased financial stress in the most recent year, primarily due to a substantial rise in current liabilities and a decline in equity. While still solvent and compliant with filings, the company’s liquidity position has weakened, warranting further review of cash flows and operational profitability to assess ongoing viability.

MINSKY MAGIC LIMITED - Analysis Report

Company Number: 12646751

Analysis Date: 2025-07-29 18:47 UTC

1. Risk Rating: MEDIUM
   The company's solvency position has deteriorated notably in the latest financial year with shareholders' funds nearly halving from approximately £79.7k in 2023 to £37.7k in 2024. Current liabilities have increased significantly, outpacing growth in current assets, which reduces net current assets and signals potential liquidity stress. However, the company remains active with no overdue filings and a positive net asset position.

2. Key Concerns:

• Sharp increase in current liabilities from £36.9k (2023) to £111.9k (2024) without a commensurate increase in current assets, diminishing liquidity and working capital buffer.
• Decline in net current assets from £65k to £15k in one year, indicating potential cash flow constraints or rising short-term obligations.
• Significant reduction in total equity/shareholders' funds, suggesting operating losses or capital erosion that could impact financial stability.

3. Positive Indicators:

• Company remains compliant with statutory filing deadlines (accounts and confirmation statements up to date), indicating good governance and regulatory compliance.
• The business has maintained positive net assets throughout its operating history, indicating solvency on a balance sheet basis.
• The presence of a director with Chartered Accountant credentials may imply competent financial management oversight.
• The company operates under micro-entity reporting provisions, reducing administrative burden and costs.

4. Due Diligence Notes:

• Investigate the nature and drivers of the large increase in current liabilities in 2024, including whether this is due to accrued expenses, short-term borrowings, or trade payables.
• Review profit and loss accounts to assess profitability trends, identify causes for equity decline, and evaluate sustainability of operations.
• Confirm the company’s cash flow position and forecast to determine if liquidity issues are short-term or structural.
• Assess the impact of the resignation of the original director (appointed 2020, resigned 2022) and any changes in management or ownership structure.
• Clarify whether there are any contingent liabilities or off-balance-sheet risks not disclosed in the micro-entity accounts.