SKALA STUDIO LTD

Executive Summary

Skala Studio Ltd exhibits a notable decline in financial health with negative working capital and shareholders' funds as at March 2024, raising concerns over its ability to service debt. The company’s limited asset base and increased short-term liabilities suggest cash flow constraints that impair creditworthiness. Careful monitoring of liquidity and management interventions is advised before considering credit facilities.

SKALA STUDIO LTD - Analysis Report

Company Number: 13198063

Analysis Date: 2025-07-19 11:51 UTC

1. Credit Opinion: DECLINE
   Skala Studio Ltd shows a weakening financial position as of the latest accounts for the year ending March 2024. The company has moved from positive net current assets and shareholders' funds in 2023 (£3,983) to negative net current assets (-£2,066) and negative equity (-£742) in 2024. This deterioration signals potential liquidity issues and increased risk of inability to meet short-term obligations. Given the micro entity scale and loss of working capital, the company currently lacks sufficient financial strength to comfortably service new or existing credit facilities without additional collateral or guarantees.

2. Financial Strength:
   The balance sheet indicates a decline in financial health. Fixed assets remain minimal (£1,324), but the key concern is the increase in current liabilities from £3,209 in 2023 to £6,913 in 2024, exceeding current assets of £4,847. The resulting negative net current assets suggest working capital deficiency. Shareholders' funds have eroded from positive to negative, highlighting accumulated losses or increased liabilities outpacing asset growth. The small share capital (£30) and limited asset base also limit the company’s buffer against financial stress.

3. Cash Flow Assessment:
   Current assets mainly reflect cash, receivables, or short-term assets totaling £4,847, but the current liabilities more than double to £6,913, indicating cash flow strain. The negative working capital position suggests the company may be relying on short-term borrowing or delayed payments to suppliers to manage cash flows. Without detailed cash flow statements, it is difficult to confirm operating cash generation, but the balance sheet signals potential liquidity challenges in meeting immediate obligations.

4. Monitoring Points:

• Track quarterly cash flow and working capital trends closely to identify any worsening liquidity.
• Monitor trade creditor days and the aging of payables to assess payment discipline.
• Review any management actions to reduce liabilities or increase assets such as additional capital injection or debt restructuring.
• Assess future profitability and revenue growth to support rebuilding equity and restoring positive working capital.
• Watch for any late filing of accounts or confirmation statements that could indicate operational difficulties.