NOVA ELECTRONICS LTD

Executive Summary

Nova Electronics Ltd’s financial position has deteriorated significantly in the latest year, moving from a marginally positive net asset position to a negative equity state with poor liquidity. The company currently lacks sufficient working capital to meet short-term obligations, posing a high risk for credit extension. Without immediate improvement in cash flow or capital structure, credit facilities should be declined at this time.

NOVA ELECTRONICS LTD - Analysis Report

Company Number: 14152133

Analysis Date: 2025-07-29 14:27 UTC

1. Credit Opinion: DECLINE
   Nova Electronics Ltd shows a significant deterioration in financial position over the last year. The net liabilities position of £1,479 as of June 2024, down from net assets of £45 the prior year, indicates a weakening balance sheet and potential solvency concerns. Current liabilities exceed current assets by £879, reflecting poor short-term liquidity and elevated risk of payment default. Given the small size and limited operating history, combined with negative net working capital and shareholder funds, the company currently lacks financial resilience to support new credit facilities without substantial improvement or mitigation.

2. Financial Strength:
   The balance sheet reveals a decline from modest positive equity (£45) in 2023 to negative equity (£1,479) in 2024. Current liabilities have reduced from £4,337 to £1,102, but current assets have decreased even more drastically from £4,982 to just £223. This implies either asset depletion or write-downs, with net current liabilities of £879 indicating insufficient short-term assets to cover immediate debts. The accruals and deferred income remain constant at £600, which further burdens net liabilities. The company’s micro-entity status and minimal asset base limit its capacity to absorb financial shocks.

3. Cash Flow Assessment:
   The cash and equivalents position is critically low at £223, insufficient to meet current liabilities of over £1,100. Working capital is negative, suggesting the company may struggle to finance day-to-day operations or meet upcoming payment obligations without external funding or improved cash inflows. The absence of detailed cash flow statements limits full assessment, but the sharp decline in current assets signals liquidity constraints. The company’s reliance on a single director and minimal staffing further heightens operational risk.

4. Monitoring Points:

• Track quarterly cash flow performance and bank balances to assess liquidity changes.
• Monitor any changes in working capital dynamics and creditor payment terms.
• Review any capital injections or external financing arrangements that could shore up equity.
• Watch for management actions to improve asset base or reduce liabilities.
• Observe operational progress given the company’s e-commerce and wholesale sector exposure, which can be volatile.