Company Number: 13524302

Analysis Date: 2025-07-20 13:52 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   MTS Software Limited is a micro-entity in the software development sector with a short trading history since incorporation in mid-2021. The company remains active and compliant with filings, which is positive. However, turnover has declined over the last year (from £54,676 to £39,378), and profits have reduced accordingly. The small scale of operations and modest profitability indicate limited capacity to absorb shocks. While net current assets and shareholders’ funds have improved year-on-year, cash flow and revenue trends require close monitoring. Credit approval is recommended with conditions: lending should be conservative, with periodic financial reviews and covenants to monitor liquidity and profitability.

2. Financial Strength:
   The balance sheet shows no fixed assets and net assets of £17,488 as of 31 July 2024. The increase in net current assets from £10,790 to £17,488 reflects improved working capital management despite decreased turnover. Current liabilities are low relative to current assets, indicating good short-term solvency. The company’s shareholders’ funds reflect retained earnings and equity, with no long-term debt recorded. The absence of fixed assets suggests limited collateral for secured lending. Overall, the financial position is stable but fragile due to the small capital base and reliance on current assets.

3. Cash Flow Assessment:
   Current assets of £19,526 exceed current liabilities of £2,038, providing a healthy net working capital position and indicating sufficient liquidity to meet short-term obligations. The company employs one staff member, and staff costs have declined, which may help conserve cash. However, turnover has decreased significantly, which could pressure cash inflows. There is no indication of external debt, reducing interest burden but also limiting financial flexibility. Cash flow appears adequate currently, but future cash generation depends on stabilizing or growing sales.

4. Monitoring Points:

• Track turnover and profit trends closely, especially the recent decline in revenue.
• Monitor cash balances and operating cash flow to ensure liquidity remains robust.
• Watch current liabilities relative to current assets to avoid working capital stress.
• Review any changes in management or operational scale that could impact financial stability.
• Assess potential need for external funding or credit lines if growth or cash flow weakens further.