SCRATCHCARD JOE LTD

Executive Summary

SCRATCHCARD JOE LTD exhibits strong liquidity and a healthy balance sheet for its first year, indicating good financial "vital signs" with solid net current assets and positive net worth. While early-stage and small scale, the company’s financial position shows no signs of distress, but ongoing focus on cash flow management, profitability, and formalizing financial arrangements will be key to sustaining and growing its business health.

SCRATCHCARD JOE LTD - Analysis Report

Company Number: NI691650

Analysis Date: 2025-07-20 12:25 UTC

Financial Health Assessment: SCRATCHCARD JOE LTD

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1. Financial Health Score: B

Explanation:
SCRATCHCARD JOE LTD demonstrates a solid financial foundation for its first year of operation as a micro-entity. The company shows strong net current assets and positive net assets, indicating a healthy liquidity position and net worth. However, the absence of income statement data and reliance on director loans introduce some caution. Overall, the company is financially sound but early-stage and should focus on sustainable cash flow and profitability.

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2. Key Vital Signs

Metric	Value	Interpretation
Fixed Assets	£919	Very low, typical for service-based video production businesses with minimal capital expenditure.
Current Assets	£183,647	Healthy level of short-term assets, likely cash and receivables, showing liquidity.
Current Liabilities	£51,114	Manageable short-term obligations; liquidity ratio suggests good ability to cover these.
Net Current Assets (Working Capital)	£132,533	Strong positive working capital, indicating the company can meet short-term debts comfortably.
Total Assets Less Current Liabilities	£133,452	Reflects overall net assets before other liabilities; positive and healthy.
Net Assets (Equity)	£127,668	Positive net worth signifies the company is solvent and has value for shareholders.
Share Capital	£12	Nominal, typical for small private companies; most equity likely accumulated profits or investments.
Director Loan	£7,352	Unsecured, interest-free loan from director; represents a source of internal financing but also a liability.
Number of Employees	1 (including director)	Very small operation, typical for startup or micro-entity in creative services.

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3. Diagnosis

"Healthy Cash Flow with Early-Stage Caution"
The company’s balance sheet shows a robust liquidity position with net current assets exceeding £130k, a strong sign that SCRATCHCARD JOE LTD can comfortably cover its short-term liabilities. This suggests "healthy cash flow" management so far, which is critical for business survival and growth. The minimal fixed assets align with the video production industry’s typical structure that relies more on skills and equipment hire rather than owning significant capital assets.

Positive net assets (£127,668) indicate the company is solvent and not over-leveraged. The presence of a director loan (£7,352) is a common "symptom" in startups where founders inject personal funds to support operations during early cash flow gaps.

However, the company is very young (incorporated October 2022) and has filed only its first set of accounts. The limited data restricts in-depth profit and loss analysis, so while there are no signs of financial distress, the company’s future profitability and sustainability remain untested. The single-employee structure suggests the business is currently low risk but also limited in scale and diversification.

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4. Recommendations

• Monitor Cash Flow Closely: Maintain the current positive working capital by managing receivables and payables efficiently. Ensure that cash inflows from video production contracts remain steady or grow.
• Build Profitability Track Record: Focus on generating consistent profits to convert positive working capital into retained earnings and reduce dependence on director loans.
• Consider Formalizing Director Loan Terms: Document the loan agreement formally to clarify repayment terms and avoid future governance issues.
• Plan for Growth: As a micro-entity with one employee, consider opportunities for scaling operations either by hiring or subcontracting to increase capacity and revenue.
• Maintain Compliance and Timely Filings: Continue to submit accounts and confirmation statements punctually to avoid penalties and maintain good standing.
• Explore Asset Investment Prudently: Although fixed assets are currently minimal, investing in essential equipment may improve operational efficiency—balance this with cash flow considerations.

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