STC DISTRIBUTION LTD

Executive Summary

STC Distribution Ltd is a newly formed micro entity with negative net assets and a working capital shortfall at its first reporting date, indicating limited financial strength and liquidity. The company’s current financial position does not support approval for credit facilities without strong mitigating factors such as owner support or new capital. Close monitoring of cash flows, profitability, and equity improvement is essential before reconsidering credit exposure.

STC DISTRIBUTION LTD - Analysis Report

Company Number: 14471095

Analysis Date: 2025-07-20 12:11 UTC

1. Credit Opinion: DECLINE
   STC Distribution Ltd is a very recently incorporated micro private limited company operating in online retail. The financials show negative net current assets of £1,670 and negative shareholders’ funds of the same amount as of its first accounting reference date. This indicates the company is currently undercapitalised and unable to meet short-term obligations from available current assets. The absence of any profits or retained earnings and minimal asset base suggest a weak financial position. Without evidence of positive cash flow or external funding, the company’s ability to service debt or credit facilities is highly questionable.

2. Financial Strength:
   The balance sheet reveals a small scale operation with current assets of only £1,570, mostly likely cash or receivables, offset by current liabilities of £3,240. Net assets stand at negative £1,670, showing an immediate liquidity strain and reliance on external funding or owner support. The company’s micro entity status and single employee indicate a nascent business with limited operational history and financial resilience. The negative equity position means shareholders have yet to inject sufficient capital or generate profits to build net worth.

3. Cash Flow Assessment:
   The negative net current assets highlight a working capital deficiency, implying that the company does not have enough short-term resources to cover immediate liabilities. This raises concerns about liquidity management and the capacity to meet supplier payments or short-term borrowings on time. Given the early stage and absence of audit, cash flow visibility is limited. However, negative working capital in a start-up retail business is a red flag for credit risk, as it may face cash flow shortfalls in operating cycles.

4. Monitoring Points:

• Progression of net current assets and move towards a positive working capital position.
• Generation of operating profits and build-up of retained earnings to strengthen equity base.
• Timeliness of future filings and any changes in director or ownership structure.
• Evidence of external funding or capital injections to support liquidity.
• Trading performance metrics such as turnover growth and gross margin improvements.
• Any overdue payments or supplier disputes indicating cash flow stress.