ML AUTOS AND RECOVERY LTD

Executive Summary

ML Autos and Recovery Ltd is a small, newly established vehicle maintenance business with modest net assets and negative working capital due to finance lease obligations. The company’s ability to meet short-term liabilities depends on effective cash flow management and operational growth. Credit approval is conditional, requiring close monitoring of liquidity, lease payments, and financial performance.

ML AUTOS AND RECOVERY LTD - Analysis Report

Company Number: 14403500

Analysis Date: 2025-07-20 13:00 UTC

1. Credit Opinion: CONDITIONAL APPROVAL ML Autos and Recovery Ltd is a recently incorporated (October 2022) small private company operating in vehicle maintenance and recovery services. The company currently exhibits a weak liquidity position with net current liabilities of £9,192, primarily due to finance lease obligations of £9,810. However, it holds tangible fixed assets (motor vehicles) valued at £11,995, which support the operational capacity. The director has demonstrated some financial stewardship by repaying a director loan post year-end. Given the company’s early stage and limited financial history, credit extension should be conditional on close monitoring of cash flow and reduction of short-term liabilities.

2. Financial Strength: The balance sheet shows net assets of £2,803 supported by fixed assets of £11,995 and modest current assets of £3,518. Shareholders’ funds equal net assets, reflecting minimal leverage equity-wise. The company’s capital base is small, with called-up share capital of £1, typical for a micro business. The main financial concern is the current liabilities exceeding current assets by over £9k, driven mainly by finance lease obligations, which suggests reliance on asset-backed finance. The company’s P&L reserve of £2,802 indicates some retained earnings or accumulated profit.

3. Cash Flow Assessment: Cash on hand is minimal at £104, which poses liquidity risks in meeting short-term obligations. Debtors total £3,414, but a significant portion (£2,764) is classified as “other debtors,” which may be less liquid or related party balances. The presence of finance lease liabilities requires ongoing cash commitment. The repayment of the director loan after year-end signals attempts to improve cash flows. Working capital is negative, so cash flow management is critical. Given the nature of the business (24/7 mobile mechanic and recovery), operational cash generation capability will be vital for debt servicing.

4. Monitoring Points:

• Liquidity trends: track cash balances and debtor collection efficiency.
• Lease and hire purchase obligations: monitor payments and potential refinancing risks.
• Profitability trends and turnover growth to assess operational sustainability.
• Director conduct and further financial support (e.g., loans or equity injections) from the sole shareholder.
• Creditors’ ageing and any overdue payments.
• Timely filing of accounts and confirmation statements to ensure compliance and transparency.