Company Number: 13761168

Analysis Date: 2025-07-29 19:03 UTC

1. Risk Rating: MEDIUM
   MS Stores (North West) Limited shows modest net assets and positive working capital, but the sizeable current liabilities relative to current assets and significant related party balances present solvency and liquidity concerns.

2. Key Concerns:

• High Current Liabilities: The company has current liabilities of £693,454 against current assets of £741,005, yielding a narrow net current asset position of only £47,551. This tight liquidity buffer may strain cash flow if receivables or stock are not converted promptly.
• Significant Related Party Payables: The company owes £558,984 to MS Stores (NI) Ltd, controlled by a director, which accounts for the majority of current liabilities. Dependency on related party funding could pose risks if this support changes.
• Limited Equity Base: Shareholders’ funds are modest at £47,551, reflecting limited equity cushion to absorb losses or support growth. The company is relatively young (incorporated late 2021) with limited historical financial depth.

3. Positive Indicators:

• Positive Net Current Assets and Net Assets: Despite the issues noted, the company maintains a positive working capital and net asset position, signaling that it can currently meet short-term obligations.
• Increasing Cash Balances: Cash at bank rose from £78,979 to £139,189 year-over-year, suggesting improving liquidity management.
• Growing Stock Levels Aligned with Business Growth: Stock increased from £409,038 to £556,878, consistent with business expansion as the employee count also rose from 32 to 42.
• Timely Filing and Compliance: No overdue filings or accounts, indicating good regulatory compliance and governance practices.
• No Director Disqualifications or Insolvency Indications: Both directors appear in good standing with no public disqualification or insolvency records.

4. Due Diligence Notes:

• Review Related Party Transactions: Investigate terms and sustainability of payables to MS Stores (NI) Ltd and extent of reliance on related party credit. Confirm whether these balances are repayable on demand or long-term.
• Cash Flow Analysis: Obtain detailed cash flow statements and forecasts to assess the company’s ability to convert stock and debtors into cash in a timely manner to meet liabilities.
• Profitability and Revenue Trends: Examine profit and loss data (not filed here) to evaluate operating performance, margins, and growth prospects given the expansion in staffing and inventory.
• Going Concern Assessment: Confirm management’s assumptions supporting going concern status, especially given the narrow net working capital.
• Intercompany Balances with MS Stores (North) Ltd: Clarify the nature and collectability of the debtor balance of £8,885 to related entity to ascertain its impact on liquidity.

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