EFFECTIVE MEDIA LIMITED

Executive Summary

Effective Media Limited has demonstrated financial improvement with positive net assets and working capital as of the latest accounts. While cash balances remain low, strong receivables support short-term liquidity. Credit approval is recommended with ongoing monitoring of debtor collections and cash flow to mitigate liquidity risk.

EFFECTIVE MEDIA LIMITED - Analysis Report

Company Number: 12765944

Analysis Date: 2025-07-29 18:11 UTC

1. Credit Opinion: APPROVE
   Effective Media Limited demonstrates a stable financial position with positive net assets and working capital as of the latest filing. The company has shown growth from a nominal net asset base in 2022 to nearly £16k in 2023, indicating improving financial health. Despite a modest cash balance, the company’s receivables significantly exceed current liabilities, supporting short-term liquidity. There is no indication of insolvency or financial distress, and management appears stable with no adverse director conduct records. Therefore, credit approval is recommended, subject to ongoing monitoring of cash flow and debtor collections.

2. Financial Strength:
   The balance sheet shows total net assets of £15,938 at 31 December 2023, up from £100 in the prior period, reflecting accumulated profits of £15,838. Current assets total £21,028, primarily trade and other debtors (£20,248), with a small cash holding (£780). Current liabilities stand at £5,090, mainly corporation tax and accruals, resulting in net current assets (working capital) of £15,938. Share capital is nominal at £100. The company’s financial strength is modest but improving, with no long-term liabilities reported.

3. Cash Flow Assessment:
   Cash at bank is low (£780), which may constrain immediate liquidity. However, the company’s receivables and net current assets provide a buffer for meeting short-term obligations. The substantial increase in debtors from £100 in 2022 to over £20k in 2023 suggests growing sales or services rendered, but also raises the importance of effective credit control. The accrued corporation tax liability (£3,715) indicates taxable profits and will require cash outflow soon. Monitoring the conversion of receivables into cash is critical to ensure ongoing liquidity.

4. Monitoring Points:

• Receivables Aging: Assess the collectability and aging profile of trade and other debtors to prevent cash flow issues.
• Cash Flow Trends: Track monthly cash balances and cash flow from operations to ensure timely payment of liabilities, including corporation tax.
• Profitability and Reserves: Review future accounts for sustained profit generation to build reserves beyond current modest levels.
• Director Stability: Monitor any changes in key management, as the recent director turnover could impact operations.