MR CHICKEN LTD

Executive Summary

MR CHICKEN LTD operates as a micro-entity in the restaurant sector with a small asset base and significant liabilities leading to negative net assets. The company maintains marginal positive working capital but exhibits declining liquidity and equity erosion. Credit approval is conditional, subject to ongoing monitoring of cash flow and financial stability given inherent risks in their financial structure and industry.

MR CHICKEN LTD - Analysis Report

Company Number: 12931548

Analysis Date: 2025-07-20 13:51 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   MR CHICKEN LTD demonstrates some equity base with net assets of -£7,164 (negative equity) as of the latest accounts, indicating liabilities exceed assets. The company is micro-sized and operates in the challenging restaurant sector (SIC 56102), which can be sensitive to economic shifts. While current liabilities exceed current assets substantially, the company shows positive net current assets of £631 in 2023, suggesting some working capital management. Director stability has improved with only one current director now. Given the small scale and negative net asset position, credit approval should be conditional on regular monitoring of cash flows and liabilities, and possibly on personal guarantees or collateral if credit exposure is material.

2. Financial Strength:
   The balance sheet reveals a declining fixed asset base (£9,212 in 2023 down from £12,750 in 2020) and a drop in current assets (£2,439 from £4,953 in 2022). Current liabilities remain high relative to current assets but net current assets remain positive at £631 (2023). The company carries significant long-term liabilities (£17,007), outweighing total assets and resulting in negative net assets (-£7,164). Shareholders' funds have deteriorated from £4,096 (2020) to negative, highlighting erosion of equity and financial vulnerability.

3. Cash Flow Assessment:
   Current assets mainly include cash and receivables; however, the drop from £4,953 to £2,439 signals weakening liquidity. Current liabilities remain relatively steady, but the positive net current assets indicate short-term obligations are being met. The company’s ability to generate positive working capital is marginal and warrants close scrutiny. The micro-entity size and limited employee base (4 employees) imply tight operational cash flows, necessitating further insight into cash generation and debt servicing capacity.

4. Monitoring Points:

• Liquidity trends: watch current assets vs current liabilities quarterly to ensure working capital sufficiency.
• Profitability and cash flow statements (not provided) to assess ability to service long-term debt.
• Director changes and governance stability.
• Any new debt or guarantees that might affect credit risk.
• Sector performance impacts, especially given restaurant industry volatility.