J P STUDIO SERVICES LTD

Executive Summary

J P Studio Services Ltd operates in motion picture production with a fragile financial profile characterized by negative working capital and sharply declining net assets. While the company is compliant with filing requirements and remains active, liquidity constraints and minimal equity suggest risk in extending credit without additional security. Careful monitoring of liquidity and director support will be essential to mitigate credit risk.

J P STUDIO SERVICES LTD - Analysis Report

Company Number: 13538440

Analysis Date: 2025-07-20 17:25 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   J P Studio Services Ltd shows ongoing operations with current filings up to date and no overdue returns, indicating compliance and operational continuity. However, the company reports persistent net current liabilities and a significant decline in net assets from £1,446 in 2023 to £104 in 2024. The working capital deficit and erosion of equity suggest liquidity constraints and a fragile financial position. The company’s ability to meet short-term obligations is questionable without additional cash inflows or capital injections. Credit approval should be conditional on securing additional collateral, personal guarantees from the directors, or demonstrated improvement in liquidity metrics.

2. Financial Strength:
   The balance sheet reveals a micro-entity with modest fixed assets (£5,239) and current assets (£23,511) offset by current liabilities of £27,948, resulting in net current liabilities of £4,437 as of July 2024. Net assets have fallen sharply from £1,446 to £104 over one year, signaling a deterioration in shareholder equity and limited buffer against financial stress. The company’s capital structure is minimal with only £101 in share capital and retained losses eroding reserves. This fragile equity base limits the company’s resilience to adverse events.

3. Cash Flow Assessment:
   Working capital is negative, highlighting potential difficulties in meeting short-term liabilities from operational cash flow. The company’s current liabilities exceed current assets by £4,437, a persistent issue noted in prior years. There is a director loan balance of £10,745 owed to the company by Mr. Stephen Powell, which could provide some liquidity support if collectible. However, reliance on director advances is not a sustainable liquidity strategy. No detailed cash flow statement is provided, but the negative working capital and equity erosion indicate weak cash flow generation and potential reliance on external funding or director support.

4. Monitoring Points:

• Liquidity metrics: Monitor current ratio and net current assets quarterly to assess short-term financial health.
• Equity position: Watch for further erosion of net assets which could threaten going concern status.
• Director loans: Track recoverability of director advances to ensure they remain available to support liquidity.
• Profitability trends: Review future profit and loss statements to confirm company can generate positive net income to rebuild reserves.
• Compliance: Ensure all future filings continue to be timely to avoid regulatory or credit risk flags.