FRA WIZARD LTD

Executive Summary

FRA WIZARD LTD is a recently incorporated private company showing a deteriorating financial position with negative net assets and poor liquidity. The company’s balance sheet is heavily weighted with capitalised intangible assets but lacks corresponding cash flow or working capital strength. Given these factors, credit exposure carries significant risk and is not recommended without material financial improvement.

FRA WIZARD LTD - Analysis Report

Company Number: 13870535

Analysis Date: 2025-07-29 20:42 UTC

1. Credit Opinion: DECLINE
   FRA WIZARD LTD demonstrates significant financial distress as evidenced by negative shareholders' funds and net assets for the latest financial year. The company’s liabilities, particularly long-term creditors (£173k), substantially exceed total assets (£156k) resulting in a net liability position of approximately £17k. This negative equity position signals high insolvency risk and questions the company's ability to meet debt obligations. The absence of amortisation on intangible assets, which form the bulk of fixed assets, raises concerns about asset valuation and potential impairment. Given the limited current assets (£1.2k) relative to current liabilities (£8.8k), liquidity is severely constrained. The company is also very young (incorporated 2022) with no reported employees, indicating limited operational scale and unproven business performance. Management quality is difficult to assess but the financial position reflects aggressive capitalisation of intangible assets without corresponding profitability or cash generation. Therefore, credit facilities are not advisable at this stage without substantial improvement in financial strength.

2. Financial Strength:
   Balance sheet analysis reveals escalating fixed assets mainly due to capitalised intangible assets (from £27k to £163k), but this is not supported by corresponding cash or debtor increases. Current assets have decreased sharply from £3.4k to £1.2k while current liabilities have nearly tripled to £8.8k, impairing working capital (now negative by £7.6k). Long-term creditors ballooned from £33.5k to £173.3k, likely reflecting increased borrowings or deferred payables. The company’s net assets turned negative by £16.7k, indicating that liabilities outweigh total assets. Given the large intangible asset base with no amortisation or impairment charge, there is a risk of overstatement of asset value. Overall, the balance sheet shows weak capital structure, negative equity, and high leverage.

3. Cash Flow Assessment:
   Cash at bank is minimal (£1.2k) and has halved year-on-year, indicating constrained liquidity. Debtors are negligible (£40), and the company has no reported employees, suggesting minimal operating activity or revenue generation. Negative net current assets imply reliance on short-term creditor financing to meet operational needs. The absence of amortisation charges suggests non-cash capitalisation of software development costs, but there is no evidence of operating cash inflows. This profile shows limited cash flow coverage for current liabilities and no buffer for contingencies, increasing the risk of payment default.

4. Monitoring Points:

• Monitor changes in intangible asset valuation and any impairment charges to ensure asset values reflect economic reality.
• Track working capital trends and cash flow from operations to assess improvements in liquidity.
• Review creditor ageing and repayment patterns to detect potential payment difficulties.
• Assess any new financing arrangements that increase long-term liabilities and impact solvency.
• Watch for changes in business activity, especially employee hiring or revenue growth, to evaluate operational scale-up.
• Evaluate management disclosures or auditor reviews on going concern status or financial risks.