THOUGHTS AND CROSSES LTD

Executive Summary

Thoughts And Crosses Ltd is currently financially distressed with escalating net liabilities and negative working capital, indicating poor liquidity and financial instability. The company’s ability to service debt is doubtful without significant operational improvements or capital injections. Given these factors, credit approval is not recommended at this time.

THOUGHTS AND CROSSES LTD - Analysis Report

Company Number: SC685289

Analysis Date: 2025-07-29 20:19 UTC

1. Credit Opinion: DECLINE. Thoughts And Crosses Ltd exhibits significant financial distress with increasing net liabilities over the last three years. The company’s current liabilities substantially exceed current assets (net current liabilities of £83,030 as of January 2024), indicating poor short-term liquidity and potential difficulties meeting immediate obligations. Negative shareholders’ funds (£40,204) and persistent losses suggest weak financial stewardship or an unprofitable business model. Without evidence of a turnaround plan, approval for credit facilities would expose the bank to a high risk of default.

2. Financial Strength: The balance sheet reveals a growing deficit in net assets from -£6,670 in 2021 to -£40,204 in 2024. Fixed assets have increased moderately, but this does not compensate for the escalating current liabilities, which more than doubled from £31,882 to £91,856. The company’s micro entity status with minimal equity capital (£100 share capital) further weakens its financial base. Overall, the financial structure is fragile, with no positive equity cushion to absorb operational or economic shocks.

3. Cash Flow Assessment: The company’s net current liabilities (-£83,030) indicate negative working capital, which is a red flag for liquidity and the ability to service short-term debts. Current assets are minimal (£8,826), likely insufficient to cover creditor demands. The company operates with one employee on average, which may limit operational capacity and cash generation. No cash flow statements are provided, but the trend of increasing liabilities suggests cash outflows are not being matched by inflows, impairing debt servicing capacity.

4. Monitoring Points:

• Track quarterly updates on current assets and liabilities to monitor liquidity trends.
• Review any management action plans addressing loss reduction or funding injections.
• Monitor director and shareholder changes to assess governance stability.
• Watch for any late filings or signs of financial distress such as creditor actions.
• Evaluate future profitability and cash flow projections if the company seeks renewed credit.