TONGTU INTERNATIONAL DEVELOPMENT LTD

Executive Summary

Tongtu International Development Ltd is currently in a financially vulnerable position with net liabilities and negative working capital, raising significant concerns about its ability to meet short-term debts. The company’s deteriorating balance sheet and poor liquidity profile justify a decline for credit extension at this time. Close monitoring of liquidity and capital structure is essential for any reconsideration in the future.

TONGTU INTERNATIONAL DEVELOPMENT LTD - Analysis Report

Company Number: 13787159

Analysis Date: 2025-07-20 17:19 UTC

1. Credit Opinion: DECLINE
   Tongtu International Development Ltd demonstrates significant financial distress as of its latest accounts dated 31 December 2023. The company has moved from positive net assets of £2,831 in 2022 to net liabilities of £5,814 in 2023. This deterioration is primarily due to current liabilities tripling from £6,997 to £29,997 while current assets declined from £9,828 to £6,933. The negative net current assets of £23,064 signify a liquidity crunch and potential inability to meet short-term obligations without external support. The absence of employees and minimal fixed assets also limit operational capacity. Given these factors, the company currently lacks sufficient financial strength and cash flow to reliably service credit facilities.

2. Financial Strength:
   The balance sheet shows weak financial health with net liabilities replacing net assets within one year. Fixed assets are negligible at £17,250 and have not contributed to improving the asset base meaningfully. The sharp rise in current liabilities and decline in current assets suggest either increased short-term debts or delayed payments to creditors, which raise concerns about business sustainability. Shareholders’ funds have turned negative, reflecting accumulated losses or withdrawals. Overall, the company’s balance sheet is fragile with limited buffer against financial shocks.

3. Cash Flow Assessment:
   Current assets include cash and debtors totaling £6,933, which is insufficient to cover the much higher current liabilities of £29,997. This results in a negative working capital position, indicating that the company may struggle to meet immediate liabilities as they fall due. The company reports zero employees, implying limited ongoing operational costs but also minimal revenue-generating activity. Without positive operating cash flow or additional financing, liquidity risk is high.

4. Monitoring Points:

• Track changes in current liabilities and liquidity ratios quarterly to detect further deterioration or improvement.
• Monitor any new capital injections or shareholder loans that could restore net asset value.
• Observe director changes and their impact on business strategy and financial stewardship.
• Watch for any overdue filings or signs of insolvency proceedings.
• Review the company’s ability to generate revenue and control costs given zero employee headcount.