Company Number: 13512755

Analysis Date: 2025-07-20 18:37 UTC

1. Credit Opinion: DECLINE
   Northern Soul Scents Ltd shows a concerning decline in financial health with net current liabilities of £6,819 as of 31 July 2024, compared to net current assets previously. The company’s net assets have diminished to just £1, indicating minimal equity buffer. The working capital deficit raises doubts about their ability to meet short-term obligations and service any new credit facilities reliably. The reduction in employee count from 4 to 2 also suggests operational contraction. Without significant improvement or external financial support, the risk of liquidity shortfall is high.

2. Financial Strength:
   The balance sheet reveals weak financial strength. The company has very low fixed assets (£6,820) and current liabilities exceeding current assets by £6,819, resulting in negative working capital. Net assets have nearly eroded from £61 in 2023 to £1 in 2024. Shareholders’ funds mirror this minimal equity. These factors indicate limited financial resilience and a fragile capital structure, which would struggle to absorb shocks or support growth.

3. Cash Flow Assessment:
   The negative net current assets position signals potential cash flow difficulties. Current liabilities exceed current assets significantly, implying the company may face challenges in paying creditors and managing day-to-day expenses without resorting to additional credit or capital injections. The absence of audit and reliance on micro-entity reporting limits detailed cash flow insights, but the working capital deficit is a clear warning of liquidity stress.

4. Monitoring Points:

• Quarterly updates on cash balances and debtor collections to assess liquidity trends.
• Changes in current liabilities and creditor payment terms.
• Any capital injections or loans from the sole controlling director or third parties.
• Operational performance indicators, including sales growth and employee headcount changes.
• Timely filing of accounts and confirmation statements to ensure compliance and transparency.