THE SEAFOOD CAVE AND GRILL LTD

Executive Summary

The Seafood Cave and Grill Ltd is a small, active restaurant business with modest financial resources and stable liquidity. Declining net assets and reduced working capital suggest caution; credit facilities should be granted conditionally with close monitoring of cash flow and profitability. Management appears experienced, but the short trading history and increased current liabilities warrant ongoing review.

THE SEAFOOD CAVE AND GRILL LTD - Analysis Report

Company Number: SC705765

Analysis Date: 2025-07-29 18:04 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   The Seafood Cave and Grill Ltd is a small private limited company operating in the unlicensed restaurant sector. It has been trading since 2021 and remains active with no liquidation or administration proceedings. The company shows modest net assets of £11,008 as of August 2024, down from £14,192 in the prior year, indicating some erosion of equity. The working capital remains positive but has declined from £3,406 to £1,840, reflecting increased current liabilities. The limited fixed asset base and small share capital are consistent with a micro/small business. Given the relatively short trading history, declining net assets, and reduced liquidity, credit approval should be conditional on ongoing monitoring of cash flow and profitability metrics, as well as confirmation of stable or improving trading performance.

2. Financial Strength:
   The balance sheet reflects a small business with total net assets of £11,008 and shareholders’ funds entirely composed of retained earnings plus nominal share capital (£100). Fixed assets are minimal (£9,168), and no significant capital expenditure was made in the last year. Current assets (£24,445) are mostly cash (£14,429) and debtors (£6,581), supporting short-term liquidity. Current liabilities have increased to £22,605 from £16,118, weakening the net current asset position. The company’s equity has decreased over recent years, which could signal some financial strain or investment in operational costs exceeding profits. Overall, the financial strength is modest but adequate for a micro/small sized restaurant business.

3. Cash Flow Assessment:
   Cash at bank remains relatively steady around £14,400, which is a positive indicator of liquidity. Debtors increased to £6,581 in 2024 from zero in 2023, which may indicate a change in credit terms or timing of receipts; this requires further enquiry. Stocks have decreased but remain moderate at £3,435. The current liabilities increase, mainly creditors, may imply pressure on short-term cash flow or extended payment terms from suppliers. The company maintains a positive but reduced net working capital (£1,840), suggesting limited buffer to absorb sudden cash flow shocks. Monitoring of debtor days and creditor payment terms is advised to mitigate liquidity risk.

4. Monitoring Points:

• Profitability trends: The absence of a filed P&L limits insight; request management accounts or profit data.
• Debtor and creditor ageing profiles: To assess collection efficiency and payment discipline.
• Cash flow forecasts: To ensure liquidity can cover operational and debt servicing needs.
• Equity position: Watch for further erosion which could impact solvency.
• Director’s conduct and management quality: The sole director is a restaurateur with no adverse records; ensure management remains stable.