NICHE MARKETING LIMITED

Executive Summary

Niche Marketing Limited demonstrates adequate short-term liquidity and operational cash flow but has increased financial leverage due to asset acquisition financed by hire purchase debt. While the company can presently meet its obligations, the high level of long-term liabilities and reduced equity suggest cautious credit extension with conditions. Ongoing monitoring of debt servicing and working capital management is essential to mitigate financial risk.

NICHE MARKETING LIMITED - Analysis Report

Company Number: 12486506

Analysis Date: 2025-07-20 16:28 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Niche Marketing Limited is a small private limited company with a relatively low net asset base (£280) but positive net current assets (£2,236) as of 31 March 2024. The company recently acquired significant fixed assets (£29,375 motor vehicles) financed primarily through hire purchase agreements, creating long-term liabilities (£31,242). While the company shows liquidity with substantial cash (£34,612) and a manageable working capital position, the heavy reliance on hire purchase debt raises concerns about financial flexibility. Approval for credit facilities is possible but should be conditional on monitoring debt servicing capability and ensuring no deterioration in liquidity or solvency metrics.

2. Financial Strength
   The balance sheet reflects a modest equity base (£280) and positive net current assets, indicating the company can cover short-term liabilities. However, the large increase in fixed assets financed through hire purchase contracts has introduced significant long-term debt (£31,242) with related provisions (£89). This leverage, although common in asset acquisition, constrains net assets and shareholder equity. The company’s retained earnings have decreased sharply from £1,178 in 2023 to £240 in 2024, reflecting either losses or capital adjustments. Overall, financial strength is weakened by increased indebtedness but not critically impaired at this stage.

3. Cash Flow Assessment
   The company’s cash position has improved markedly from £1,547 in 2023 to £34,612 in 2024, suggesting good cash inflows or financing activity. However, trade debtors have decreased significantly from £20,570 to £1,272, which may indicate tighter credit control or reduced sales on credit terms. Current liabilities have also increased to £33,648, reflecting VAT, tax liabilities, directors’ accounts, and hire purchase payments due within one year. The positive net current assets and strong cash balance support short-term liquidity, but ongoing cash flow must be carefully managed given the significant hire purchase commitments.

4. Monitoring Points

• Monitor hire purchase debt repayment schedules and interest servicing to avoid liquidity strain.
• Watch for any further decline in net assets and shareholders’ funds, which could signal financial deterioration.
• Track debtor and creditor days to ensure working capital efficiency and timely collection of receivables.
• Review cash flow statements regularly to confirm operating cash generation is sufficient to meet debt obligations.
• Keep an eye on tax liabilities, especially VAT and corporation tax components, to avoid unexpected cash outflows.