MITHO CHICKEN LTD

Executive Summary

MITHO CHICKEN LTD is a recently incorporated micro-entity operating in the take-away food sector with current financials showing balance sheet insolvency and slight liquidity pressure. Despite compliance with filing requirements and an active operational base, the company’s negative net assets and significant long-term creditors present considerable solvency risk. Further due diligence on creditor terms, cash flow sustainability, and business prospects is essential before considering investment.

MITHO CHICKEN LTD - Analysis Report

Company Number: 14469725

Analysis Date: 2025-07-20 13:12 UTC

1. Risk Rating: HIGH

The company exhibits a high risk profile primarily due to the presence of net liabilities on the balance sheet and limited financial buffers. The micro-entity's total net assets are negative (-£1,712), indicating insolvency on a balance sheet basis. The current liabilities exceed current assets, resulting in a negative net current asset position (-£197), which signals liquidity strain. Additionally, the company is relatively newly incorporated (November 2022) and operates in a sector (take-away food) that can have volatile cash flows and thin margins, heightening operational risk.

2. Key Concerns:

• Balance Sheet Insolvency: The company reports net liabilities of £1,712, reflecting that total liabilities outweigh total assets. This raises concerns over the company’s ability to meet long-term obligations.
• Liquidity Constraints: Current liabilities of £3,592 slightly exceed current assets of £3,395, yielding a negative net working capital position which could impair the company’s ability to cover short-term obligations as they fall due.
• High Long-Term Creditors: A material creditor balance of £12,000 falling due after more than one year suggests the company has outstanding debt or obligations that may require refinancing or repayment in the future, which could be challenging given the current insolvency.

3. Positive Indicators:

• No Overdue Filings: The company’s accounts and confirmation statement filings are up to date, indicating compliance with statutory requirements and good governance practices.
• Single Director and PSC: Ownership and control are consolidated under one individual (Mr. Subash Sharma), which may facilitate swift decision-making.
• Micro-Entity Status: The company qualifies as a micro-entity with limited reporting requirements, which may reduce administrative burden and associated costs during early stages of operation.
• Employee Base: The company employs an average of 5 employees, suggesting some operational scale beyond sole proprietorship, which may indicate a modest but operational business activity.

4. Due Diligence Notes:

• Clarify Nature and Terms of Long-Term Creditors: Investigate the £12,000 creditors due after more than one year to understand the source, terms, and repayment schedule. Determine if these are loans, trade payables, or other liabilities.
• Cash Flow and Profitability Analysis: Obtain management accounts or cash flow statements to assess operational cash generation and short-term liquidity beyond the snapshot provided by the balance sheet.
• Business Plan and Revenue Streams: Evaluate the company’s business model, market positioning, and revenue projections given the competitive nature of the take-away food sector.
• Director's Financial Support: Confirm if the director has provided or plans to provide additional financial support or guarantees to sustain the company through early losses.
• Potential Contingent Liabilities: Review any off-balance-sheet liabilities, pending litigation, or tax obligations that could impact financial stability.