SKD CONVENIENCE LIMITED

Executive Summary

SKD Convenience Limited is a recently formed company exhibiting weak financial metrics, including negative net assets and substantial working capital deficits. Its current liquidity position and cash flow constraints present significant credit risk, limiting its ability to service new debt. Close monitoring of liquidity improvements and operational performance is essential before considering credit facility approval.

SKD CONVENIENCE LIMITED - Analysis Report

Company Number: 15112965

Analysis Date: 2025-07-20 11:36 UTC

1. Credit Opinion: DECLINE
   SKD Convenience Limited is a newly incorporated entity (since September 2023) and has reported net liabilities of £3,606 with negative working capital of £150,568 as of October 2024. The current liabilities significantly exceed current assets, indicating a strained liquidity position. The company’s reliance on other creditors (£204,996) within current liabilities further exacerbates short-term repayment risk. Given these factors and the absence of profitability information, the company currently lacks the financial robustness to comfortably service additional debt or credit facilities.

2. Financial Strength:

• Fixed assets total £169,522, composed mainly of intangible assets (£124,328 goodwill) and tangible assets (£45,194 plant and machinery).
• Current assets are £63,845, including cash of only £2,692, trade debtors of £15,901, and inventory at £45,252.
• Current liabilities at £214,413 heavily outweigh current assets, resulting in a negative net working capital of £150,568.
• There is a long-term bank loan of £22,560.
• Shareholders’ funds are negative at £3,806, reflecting accumulated losses or undercapitalization.
  The balance sheet shows an asset-heavy but liquidity-poor structure with insufficient equity buffer, raising concerns over solvency and financial resilience.

3. Cash Flow Assessment:

• Cash on hand is minimal (£2,692), which limits the company’s immediate liquidity to meet obligations.
• Large trade and other creditors suggest the company may be relying on supplier credit or deferred payments to cover working capital needs.
• Negative net current assets and a sizeable bank loan indicate potential cash flow pressure.
• Debtor levels (£15,901) are modest but may not be sufficient to offset liabilities due.
  Overall, cash flow appears constrained, and the company may face difficulties in meeting short-term liabilities without additional capital infusion or improved operational cash generation.

4. Monitoring Points:

• Liquidity ratios, particularly current ratio and quick ratio, to track improvements or deterioration in working capital management.
• Profitability trends once income statements become available to assess operational viability.
• Changes in creditor terms and levels to identify any increasing reliance on supplier credit.
• Cash flow statements to monitor actual cash generation and debt servicing capacity.
• Management actions regarding capital restructuring or equity injections to strengthen the balance sheet.