TOV CARS LTD

Executive Summary

Tov Cars Ltd is financially distressed with negative net assets and working capital deficits worsening over time. Liquidity is constrained with minimal cash relative to creditors, raising high credit risk. Given its poor financial strength and lack of profitability, credit approval is declined without significant additional security or guarantees.

TOV CARS LTD - Analysis Report

Company Number: 13190926

Analysis Date: 2025-07-29 20:49 UTC

1. Credit Opinion: DECLINE
   Tov Cars Ltd demonstrates weak financial health with persistent net current liabilities and negative shareholders’ funds, indicating an inability to cover short-term obligations from current assets. The company’s net liabilities deepened from £25,757 in 2023 to £33,909 in 2024, showing worsening financial position. Cash reserves are minimal (£1,691), insufficient to meet current liabilities (£35,600). The absence of positive retained earnings and ongoing losses suggest no profitability trajectory. Given these factors and the company’s early stage (incorporated in 2021), the risk of default on credit facilities is high. Approving new credit without substantial mitigating factors or guarantees is not advisable.

2. Financial Strength:
   The balance sheet shows a deteriorating position with net liabilities increasing over the last two years. Current liabilities exceed current assets by a significant margin, yielding negative net working capital (-£33,909). Shareholder funds are negative and worsen year over year, reflecting accumulated losses and erosion of equity. Fixed assets are not disclosed, implying limited asset backing. The company’s capital base is minimal (£1 share capital), providing no buffer against financial distress. Overall, the balance sheet is weak, indicating poor financial strength and limited resilience.

3. Cash Flow Assessment:
   Cash holdings are very low and only marginally increased from £545 to £1,691, an insufficient level relative to the creditor obligations of £35,600. The working capital deficit underscores liquidity strain and potential difficulty in meeting short-term commitments. Without evidence of positive operating cash flows or external funding, the company likely faces cash flow constraints. The average employee count (8) implies fixed overheads that may pressure cash resources further. Cash flow risk is elevated, and the company may rely on director loans or external injections to maintain operations.

4. Monitoring Points:

• Monthly cash flow and liquidity position to detect any worsening cash shortages.
• Changes in current liabilities to assess if creditor pressures increase.
• Profit and loss trends when available to monitor for operational improvements or further losses.
• Director or shareholder financial support presence and terms, given weak equity base.
• Any changes in business activity or SIC code that could impact revenue generation.