DROP STUDIOS SPACE LTD

Executive Summary

DROP STUDIOS SPACE LTD is currently in a weak financial position with persistent negative equity and insufficient working capital. Liquidity constraints and ongoing losses limit its ability to service debt or support new credit. Without clear signs of operational improvement or capital injection, the company poses a high credit risk and credit approval is not recommended at this time.

DROP STUDIOS SPACE LTD - Analysis Report

Company Number: 13059097

Analysis Date: 2025-07-20 13:31 UTC

1. Credit Opinion: DECLINE
   DROP STUDIOS SPACE LTD shows persistent net current liabilities and negative shareholders’ funds over the last four years, indicating ongoing losses and erosion of equity. The company’s current liabilities exceed current assets by over £30,000 as of the latest accounts, signaling working capital deficiency and potential liquidity risk. The absence of an audit and limited financial disclosures further impede confidence in financial stewardship. Given the negative equity position, weak liquidity, and no evidence of financial turnaround, the company is unlikely to comfortably meet debt obligations or sustain credit facilities without significant improvement.

2. Financial Strength:
   The balance sheet reflects a weak financial position with negative net current assets of £30,142 (2023) and shareholder funds of £-30,145. Current assets increased modestly to £37,727 driven mostly by higher debtors (£30,581), but cash balances decreased to £7,146, raising concerns about cash availability. Current liabilities rose substantially to £67,869, mainly short-term creditors and possibly overdrafts. The negative equity position has improved slightly from £-41,036 in 2020 but remains substantially negative, indicating accumulated losses and insufficient capitalisation. The company remains in a fragile state with limited buffer to absorb financial shocks.

3. Cash Flow Assessment:
   The company’s cash position of £7,146 is low relative to current liabilities, indicating constrained liquidity. High debtor balances suggest receivables management is critical; delayed collections could exacerbate liquidity stress. The net working capital deficit of £30,142 points to reliance on supplier credit or short-term borrowings to fund operations. The stability of cash flow is uncertain without detailed profit and loss data, but historical trends imply ongoing cash flow challenges. The company’s ability to generate sufficient operational cash flow to service debt is questionable in the current state.

4. Monitoring Points:

• Monitor quarterly cash flow statements and debtor ageing reports to assess liquidity trends.
• Watch changes in current liabilities, especially any increase in short-term borrowings or overdrafts.
• Observe any improvements in net asset position and attempts to raise equity or reduce losses.
• Track director actions or restructuring steps aimed at financial turnaround.
• Review compliance with filing deadlines and any audit requirements to ensure transparency.