SOUND VARIATIONS LTD

Executive Summary

SOUND VARIATIONS LTD is a micro-entity with a stable but very small balance sheet and no debt, funded entirely by its sole shareholder. The company demonstrates compliance with statutory filings and shows no liabilities, but its limited liquidity and asset base suggest cautious credit exposure. Approval for small credit facilities is appropriate with ongoing monitoring of cash flow and operational growth.

SOUND VARIATIONS LTD - Analysis Report

Company Number: 14266706

Analysis Date: 2025-07-20 18:36 UTC

1. Credit Opinion: APPROVE with caution. SOUND VARIATIONS LTD is a very small micro-entity with minimal liabilities and modest net assets. The company is active and has timely filings, indicating compliance and operational status. However, the absence of current assets (cash or receivables) and low asset base suggest limited liquidity and operational scale, which may restrict its ability to service larger debt or credit lines. Approval for modest credit facilities with monitoring is reasonable given the limited financial depth.

2. Financial Strength: The balance sheet shows total net assets of £5,639 at 31 August 2024, unchanged from the previous year, reflecting a stable but very small capital base. Fixed assets are minimal (£2,699), and current assets are recorded as zero, though prepayments/accrued income of £2,940 are noted, which is somewhat unusual but likely timing or classification related. There are no current or long-term liabilities, indicating a clean balance sheet with no debt burden. Shareholders’ funds equal net assets, fully funded by the sole owner, which reinforces the company's equity position but also highlights the absence of external financing.

3. Cash Flow Assessment: The company reports no current assets such as cash or debtors, which raises concerns about liquidity and working capital. The prepayments/accrued income balance suggests some income or expenses are recorded in advance, but without cash or receivables, the company’s ability to meet immediate cash obligations is unclear. Given the nature of the business (sound recording and music publishing), cash flow may be project-based or irregular. The lack of creditors and liabilities reduces short-term pressure, but a close review of cash inflows and outflows should be undertaken before extending significant credit.

4. Monitoring Points:

• Monitor cash flow statements and bank balances for liquidity adequacy.
• Watch for growth in current assets, especially cash or receivables, indicating improved operational cash generation.
• Track turnover and profitability trends as they become available to assess business growth.
• Confirm ongoing timely filing of accounts and confirmation statements to maintain compliance status.
• Review director’s conduct and any changes in ownership or control.