CAVE DIGITAL LTD

Executive Summary

Cave Digital Ltd is a micro-entity with early-stage financials showing positive working capital but negative net equity due to deferred income and accruals timing. The company demonstrates compliance and operational continuity but requires cautious credit terms with ongoing liquidity monitoring. The small size and concentrated ownership amplify both risk and agility factors.

CAVE DIGITAL LTD - Analysis Report

Company Number: 14403069

Analysis Date: 2025-07-20 14:00 UTC

1. Credit Opinion:
   CONDITIONAL APPROVAL. Cave Digital Ltd is a micro private limited company operating in digital marketing and IT consultancy since October 2022. The company is currently active with no overdue filings, indicating compliance discipline. However, its net asset position has deteriorated from a positive £385 in 2023 to negative £1,769 in 2024, primarily due to accruals and deferred income increasing significantly. The business is small with a single employee and a single controlling shareholder/director, which concentrates risk but may also allow agile decision-making. Given the early stage and current financials, credit should be extended cautiously with conditions such as monitoring liquidity and timely cash flow management.

2. Financial Strength:
   The balance sheet shows current assets of £8,237 against current liabilities of £5,608, yielding net current assets of £2,629, which is a positive liquidity buffer. However, after accounting for accruals and deferred income (£4,398), the company reports net liabilities of £1,769. The increase in deferred income may reflect payments received in advance or unearned revenue, which could reverse positively if properly realized. Shareholders funds are negative, reflecting accumulated losses or timing differences in recognition. Total asset base is modest, consistent with a micro-entity. Overall, financial strength is weak due to negative equity but manageable if cash flows remain positive.

3. Cash Flow Assessment:
   Current assets largely consist of cash and receivables (exact composition not detailed), supporting short-term obligations. The increase in current assets year-on-year (£5,287 to £8,237) is positive. Current liabilities have risen but are covered by current assets with a net working capital surplus. The significant increase in accruals and deferred income suggests timing differences in revenue recognition and expenses incurred, which could pressure cash flow if not managed carefully. The company’s micro size and single employee base imply low fixed overheads, which supports liquidity resilience. Close attention to receivables collection and managing payables will be critical.

4. Monitoring Points:

• Track net asset position, especially changes in deferred income and accruals, to ensure liabilities do not exceed assets.
• Monitor cash flow statements for operating cash generation to assess ability to service short-term liabilities.
• Review turnover and profitability trends in subsequent filings to confirm business growth and sustainability.
• Keep an eye on director changes or related party transactions given the concentration of control.
• Assess any material contracts or client concentration risks due to the small scale of operations.