SMILE GURU LTD

Executive Summary

SMILE GURU LTD, a newly formed dental practice, shows a negative equity position and significant working capital shortfall in its first-year accounts. The company’s liquidity is strained with current liabilities far exceeding current assets, indicating inability to service debt comfortably. Given the early stage and financial weaknesses, credit approval is declined pending improvement in cash flows and equity position.

SMILE GURU LTD - Analysis Report

Company Number: 14761923

Analysis Date: 2025-07-20 15:10 UTC

1. Credit Opinion: DECLINE

SMILE GURU LTD is a newly incorporated dental practice (incorporated March 2023) with its first financial statements filed for the period ending March 2024. The company’s financial position shows significant weaknesses. The balance sheet reveals net current liabilities of £506,909 and overall net liabilities of £9,549, indicating a negative equity position. Current liabilities (£556,771) far exceed current assets (£49,862), highlighting liquidity stress. The company has recorded goodwill of £481,500 from acquisition of unincorporated business, amortised by £53,500 in the first year. However, this intangible asset is not generating sufficient working capital or cash flow strength. The sole director and 100% shareholder is a dentist, suggesting operational expertise but limited financial buffer in the business. The absence of P&L data limits insight into profitability, but the negative net assets and large current liabilities outweigh the prospects.

Given the negative working capital, lack of equity cushion, and early stage of operations with no trading track record, the company is not in a position to comfortably service additional debt or credit facilities. The sizeable short-term creditor balance (£547,105) may represent acquisition-related payables or start-up costs yet to be settled, increasing risk. Without clear evidence of cash flow generation or capital injection plans, lending exposure would be high risk.

2. Financial Strength:

• Fixed assets: £497,360 (mainly goodwill £481,500 and tangible assets £15,860).
• Current assets: £49,862 (primarily cash £48,171).
• Current liabilities: £556,771.
• Net current assets: negative £506,909.
• Shareholders’ funds: negative £9,550.

The negative net assets and working capital deficit indicate impaired financial strength. The company’s balance sheet is leveraged with limited liquidity to meet short-term obligations. The goodwill asset may not be readily realisable in a downturn, and tangible asset value is minimal.

3. Cash Flow Assessment:

• Cash at bank is £48,171, which is minor relative to current liabilities.
• Debtors only £1,691, suggesting limited receivables generation.
• The large creditor balance implies significant payables likely due within 12 months.
• Negative net current assets reflect poor liquidity and potential cash flow constraints.

The company’s cash flow position appears fragile with cash insufficient to cover near-term liabilities. The absence of profit and loss data restricts deeper cash flow analysis, but the working capital deficit signals cash flow risk.

4. Monitoring Points:

• Quarterly cash flow forecasts and working capital trends.
• Timely settlement of current liabilities to avoid creditor pressure.
• Profitability and revenue growth to improve liquidity.
• Director’s plans for capital injections or refinancing to bolster equity.
• Monitoring for potential impairment of goodwill or asset write-downs.
• Any delays in statutory filings or signs of payment defaults.

Summary:

SMILE GURU LTD’s first-year financials reveal a structurally weak balance sheet with negative net assets and significant working capital deficits. The company’s liquidity is insufficient to cover current liabilities, creating a high-risk credit profile. Without demonstrated profitability or capital support, the company is not recommended for credit extension at this stage.