MORLEY GARDEN HOMES LIMITED

Executive Summary

Morley Garden Homes Limited demonstrates steady net asset growth and expanding fixed assets, signaling business development. However, persistent negative working capital and significant creditor reliance present liquidity risks that require close monitoring. Conditional credit approval is recommended, contingent on improved cash flow management and ongoing financial oversight.

MORLEY GARDEN HOMES LIMITED - Analysis Report

Company Number: 13445725

Analysis Date: 2025-07-20 14:58 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Morley Garden Homes Limited is a micro private limited company engaged in landscape services and building completion activities. The company has shown steady growth in net assets from £9,930 in 2021 to £178,387 in 2024, indicating positive business development. However, the company consistently reports negative net current assets (working capital deficit), reflecting liquidity pressure. Given the relatively high current liabilities (£437k) versus current assets (£189k) and the sizeable long-term creditors (£437k), the company’s ability to meet short-term obligations may be constrained. The director is the sole significant controller and also actively involved in operations, suggesting focused management but also concentration risk. Credit approval should be conditional on regular monitoring of liquidity and receivables management.

2. Financial Strength:
   The balance sheet position shows fixed assets increasing substantially to £770,759, supporting the company’s operational capacity. Net assets and shareholders’ funds have increased robustly year-on-year, which is a positive indicator of retained earnings and business value growth. However, the persistent negative net current assets (-£155,241 in 2024) highlight an ongoing working capital deficiency. Current liabilities exceed current assets by a significant margin, raising concerns about short-term solvency. The company relies on creditor funding both short and long term, which may pressure liquidity in tighter economic conditions.

3. Cash Flow Assessment:
   The company’s liquidity is constrained due to negative working capital, implying cash tied up in payables exceeding readily available current assets. This could lead to potential cash flow challenges in meeting immediate obligations without external funding or improved cash collection. The increase in fixed assets suggests capital expenditure, possibly financed through long-term creditors, increasing financial leverage. Cash flow management will be critical, with emphasis on accelerating debtor collections and controlling payables to avoid liquidity bottlenecks.

4. Monitoring Points:

• Working capital ratios and trends to detect any worsening liquidity.
• Timeliness and aging of trade receivables and payables.
• Debt servicing ability, including interest and principal repayments on long-term creditors.
• Profitability trends and cash conversion cycle improvements.
• Management’s ability to maintain or grow fixed asset base without exacerbating liquidity strain.
• Any changes in director or PSC status that could affect governance or control.