PARADIGM SCALE LTD

Executive Summary

Paradigm Scale Ltd shows signs of financial weakening with declining net assets and reduced current assets, though it maintains positive working capital and timely filings. Credit can be provisionally approved with close monitoring of liquidity, profitability, and management effectiveness to mitigate risk in this micro-entity advertising agency. The company’s limited scale and asset base warrant cautious credit exposure.

PARADIGM SCALE LTD - Analysis Report

Company Number: 13113481

Analysis Date: 2025-07-29 16:56 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Paradigm Scale Ltd is a small micro-entity with limited financial scale and history, incorporated in 2021. The company remains active with timely filings and no overdue accounts or returns. Its current assets cover current liabilities, indicating short-term liquidity. However, the net assets and shareholders’ funds have declined notably over the past two years (from £18,284 in 2021 to £5,373 in 2024), reflecting erosion of capital and potential profitability or cash flow issues. The business operates in the advertising agency sector, a competitive and variable market, increasing operational risk. Given these factors, credit can be extended with conditions including regular financial monitoring and potentially limits on exposure until profitability and net asset stability improve.

2. Financial Strength
   The company’s balance sheet shows a modest net asset base (£5,373 at June 2024) with no fixed assets, indicating limited tangible collateral. The decline in net assets over three years signals financial deterioration, possibly due to operating losses or distributions. Current assets have decreased from £20,404 (2023) to £12,496 (2024), while current liabilities have decreased proportionally, maintaining a positive net working capital position (£12,496). The presence of creditors falling due after one year (£7,123 in 2024) should be scrutinized for repayment terms. Overall, financial strength is weak with limited equity cushion and minimal asset backing.

3. Cash Flow Assessment
   The company’s working capital is positive, suggesting ability to meet short-term obligations. However, the drop in current assets and net assets indicates possible cash flow constraints or reduced liquidity. The average employee count is one, implying low overhead but limited operational scale. Absence of fixed assets reduces capital expenditure needs but also limits asset-backed borrowing options. Cash flow should be monitored closely, especially given declining net assets, to ensure ongoing operational viability and debt servicing capacity.

4. Monitoring Points

• Monthly/quarterly cash flow and liquidity reports to detect early signs of cash shortfalls.
• Profitability trends in future accounts to evaluate turnaround or further decline.
• Changes in creditors’ structure, particularly long-term payables and their terms.
• Director’s management actions to stabilize or grow the business given current financial erosion.
• Any material changes in business model or market conditions affecting revenue streams.