MOHANARANGAM SERVICES LTD

Executive Summary

Mohanarangam Services Ltd is a newly incorporated micro-entity with a modest balance sheet and positive net working capital but has shown a marked decline in assets and equity in its latest accounts. The company’s limited financial history and scale warrant caution, recommending conditional credit approval subject to ongoing monitoring of liquidity and financial performance. The absence of long-term debt is a positive factor, but cash flow volatility requires oversight.

MOHANARANGAM SERVICES LTD - Analysis Report

Company Number: 13887761

Analysis Date: 2025-07-20 17:25 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Mohanarangam Services Ltd is a micro-entity with a very small scale of operations and limited financial history, incorporated in 2022. The company shows positive net current assets and net assets but has experienced a significant reduction in current assets and net assets in the latest financial year (2024) compared to the previous year (2023). This decline indicates some weakening in financial strength and liquidity, which warrants caution. Given the limited trading history and volatility in working capital, credit approval should be conditional on monitoring future financial performance and obtaining up-to-date management financial forecasts.

2. Financial Strength:
   The balance sheet shows net assets of £5,872 as of 29 February 2024, down from £12,122 the previous year. The company holds no fixed assets, and current assets consist mainly of cash and short-term receivables. Current liabilities are low (£879), so working capital remains positive (£5,872), but the sharp decrease in current assets from £26,222 to £6,751 suggests either reduced sales, collection issues, or increased cash outflows. Shareholders’ funds mirror net assets, indicating no long-term debt, which reduces financial risk but also limits capital buffers.

3. Cash Flow Assessment:
   Liquidity appears adequate in the short term given positive net current assets and low current liabilities. However, the reduction in current assets raises concerns about cash generation capacity. The lack of detailed cash flow statements makes it difficult to fully assess operational cash flow, but the micro entity status and one employee indicate a small scale operation with limited operating complexity. Working capital remains positive, but tight, so the company may face cash flow strain if business conditions deteriorate or if unexpected expenses arise.

4. Monitoring Points:

• Track quarterly or interim financials to detect any further decline in liquidity or net assets.
• Monitor accounts receivable aging and cash conversion cycle closely due to significant changes year-on-year.
• Assess management’s ability to maintain or grow revenues and control expenses, given the small scale.
• Review any related party transactions or director loans that could impact financial stability.
• Confirm no director disqualifications or adverse regulatory actions arise, as management currently appears stable.