MM CONTRACTS INCORPORATED LTD

Executive Summary

MM CONTRACTS INCORPORATED LTD faces ongoing liquidity and working capital challenges, with persistent negative net current assets and minimal cash reserves undermining its short-term financial viability. Despite some asset backing, the company’s balance sheet has weakened over time, and the current financial profile suggests elevated credit risk. Without clear signs of improved cash flow or operational scale, the risk of default is significant, leading to a recommendation to decline credit at this time.

MM CONTRACTS INCORPORATED LTD - Analysis Report

Company Number: 13211386

Analysis Date: 2025-07-20 18:58 UTC

1. Credit Opinion: DECLINE

MM CONTRACTS INCORPORATED LTD demonstrates significant liquidity and working capital challenges that undermine its capacity to service additional debt or meet short-term financial obligations reliably. The company has persistently negative net current assets over the last three years, with a worsening position from -£22,664 in 2021 to -£24,463 in 2024, indicating ongoing cash flow strain. Current liabilities increased from £24,412 to £30,236 over the same period, outpacing current assets which remain very low (£5,773 in 2024). The absence of employees suggests minimal operational scale and possibly limited revenue generation. Despite positive net assets driven by tangible fixed assets, the heavy current liabilities and deferred tax provisions (£5,548 in 2024) raise concerns about near-term financial stability and creditor protection. Without a clear improvement in liquidity or profitability, the risk of default is elevated, warranting a credit decline.

2. Financial Strength:

The balance sheet shows net assets of £11,317 as of February 2024, down from £29,550 in 2021, signaling erosion of equity possibly due to operating losses or asset depreciation. Tangible fixed assets total £41,328, primarily in plant, machinery, and motor vehicles, but these are illiquid and cannot easily cover short-term liabilities. The company carries a deferred tax liability of £5,548, reducing net asset value further. Share capital is nominal at £1, indicating minimal shareholder funding. The downward trend in net assets and consistent negative working capital reflect weak financial strength and limited buffer to absorb financial shocks.

3. Cash Flow Assessment:

Cash at bank is minimal at £1,011 with debtors at £4,762. The current liabilities of £30,236, largely taxes and social security (£26,190), create a substantial short-term repayment obligation that far exceeds available liquid resources. Negative net current assets indicate the company is reliant on external financing or deferrals to meet day-to-day commitments. The absence of employees and low cash balances suggest limited operational cash inflows and potential difficulty in sustaining operations without additional capital injections or improved cash collection.

4. Monitoring Points:

• Liquidity Ratios: Current ratio and quick ratio to monitor short-term solvency improvements.
• Cash Flow Trends: Regular review of operating cash flow to detect any improvement or deterioration.
• Debtor Collection Efficiency: Timeliness and collectability of trade debtors given their materiality relative to cash.
• Deferred Tax Liability: Potential impact on cash flows if this liability crystallizes.
• Management Actions: Evidence of restructuring, cost control, or capital injection to improve working capital.