YONG HAO FOOD LTD

Executive Summary

Yong Hao Food Ltd exhibits a weak financial position with negative net assets and substantial working capital deficits over consecutive years, indicating high credit risk. The company lacks sufficient liquidity and equity to support additional borrowing or credit commitments. Credit facilities are not recommended without significant financial restructuring or evidence of improved operational cash flows.

YONG HAO FOOD LTD - Analysis Report

Company Number: 13630673

Analysis Date: 2025-07-20 11:13 UTC

1. Credit Opinion: DECLINE
   Yong Hao Food Ltd shows persistent negative net assets and net current liabilities over the last three financial years, indicating significant financial distress. The company’s liabilities exceed its assets by £21,813 as of the latest accounts, with working capital deficit worsening slightly. This weak capital structure raises doubts about the company’s ability to meet short-term obligations and service any additional debt. Given the lack of profitability data and continuous erosion of equity, the risk of default is elevated. Without a clear turnaround plan or evidence of improved cash flows, extending credit would be inadvisable.

2. Financial Strength:
   The balance sheet reveals fixed assets valued at £99,000 against current liabilities of £121,253, resulting in a large negative working capital position (-£120,813). Net liabilities have increased from £14,618 in 2022 to £21,813 in 2023, showing a deteriorating financial position. Shareholders' funds remain negative, reflecting accumulated losses or insufficient capital injection. The micro-entity status limits transparency but does confirm minimal turnover and asset base scale. The company’s financial structure is fragile, lacking a buffer to absorb operational shocks or fund growth.

3. Cash Flow Assessment:
   Current assets are negligible (£440) compared to current liabilities, indicating poor liquidity and an inability to cover short-term debts without external support. The consistent negative net current assets suggest ongoing cash flow difficulties. There is no indication of cash reserves or working capital improvements, raising concerns about operational sustainability and timely payment to suppliers or creditors.

4. Monitoring Points:

• Monitor changes in net current assets and net liabilities for improvement or further deterioration.
• Review any forthcoming trading or cash flow statements to assess operational cash generation.
• Track director or shareholder capital injections or restructuring efforts.
• Watch for overdue filings or signs of insolvency proceedings given the weak financial position.
• Evaluate any changes in business strategy or market conditions impacting the takeaway food sector.