NEON PLAYGROUND LTD

Executive Summary

Neon Playground Ltd is an early-stage IT consultancy with limited financial history and a small balance sheet showing negative working capital. While liquidity is supported by cash and director funding, the company requires careful monitoring of cash flows and working capital management. Conditional approval is recommended, contingent upon ongoing financial performance and liquidity improvements.

NEON PLAYGROUND LTD - Analysis Report

Company Number: 14849806

Analysis Date: 2025-07-29 17:41 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Neon Playground Ltd is a newly incorporated IT consultancy and software development company with a single director/shareholder. The company shows a net asset position but negative working capital, indicating current liabilities exceed current assets by £2,609. The company has a director’s loan account with a balance of £4,008 owed to the director, which could provide short-term liquidity support. Given its early stage of trading, limited operating history, and a small scale of operations (1 employee), credit risk exists primarily from limited financial track record and working capital deficiency. Approval is recommended with conditions including regular monitoring of liquidity metrics and confirmation of cash flow improvements before increasing credit exposure.

2. Financial Strength:
   The balance sheet reflects minimal fixed assets (£3,000) and current assets of £34,873, primarily cash (£23,913) and debtors (£10,960). Current liabilities of £37,482 create a net current liability of £2,609, which is a concern but not uncommon for a start-up. Net assets stand at a modest £391, representing initial equity plus retained earnings for the first trading period. Related party creditor balances (£27,500 owed to Mashup Garage) are significant, indicating reliance on related entities for funding or operational support. The capital structure shows reliance on director funding and shareholder equity with no external debt reported.

3. Cash Flow Assessment:
   Cash at bank (£23,913) provides a liquidity cushion; however, the current liabilities exceed current assets, highlighting potential short-term liquidity constraints. The director’s loan account suggests some internal financing flexibility. No audit was performed, and the company is exempt from audit due to size, so detailed cash flow statements are not available. The company should focus on improving debtor collections and managing creditor payments to avoid liquidity issues. Monitoring cash burn rate and ensuring timely receipt of payments will be critical to sustain operations.

4. Monitoring Points:

• Liquidity ratios, especially current ratio and quick ratio, to track improvement in working capital.
• Director’s loan account movements and related party transactions for potential financial support or risks.
• Debtor ageing and credit control effectiveness given the reliance on timely payments.
• Turnover growth and profitability trends in subsequent accounts to assess business viability.
• Timely filing of accounts and confirmation statements to maintain regulatory compliance.