VELVET NORTH LIMITED

Executive Summary

Velvet North Limited demonstrates initial financial stability with positive net assets and liquidity reflecting a strong balance sheet for a micro-entity. Due to its recent incorporation and limited trading history, credit approval should be conditional on monitoring future trading results and cash flow generation. The company currently shows no signs of financial distress but remains at an early stage of business development requiring cautious credit exposure.

VELVET NORTH LIMITED - Analysis Report

Company Number: 14837458

Analysis Date: 2025-07-29 20:24 UTC

1. Credit Opinion: APPROVE with conditions
   Velvet North Limited is a newly incorporated micro-entity engaged in motion picture production. The company shows a positive net current asset position and shareholders' funds, indicating initial financial stability. However, given its very recent incorporation (May 2023), limited operating history, and a single director who is also the sole shareholder, approval should be conditional on continued monitoring of trading performance and liquidity. The company's ability to generate sustainable cash flows and profitability remains unproven, necessitating caution.

2. Financial Strength:
   The balance sheet at 31 May 2024 shows:

• Fixed Assets of £1,281, representing minimal long-term investments or equipment.
• Current Assets of £13,421 versus Current Liabilities of £6,201, resulting in net current assets of £7,220. This implies a comfortable working capital buffer.
• Total net assets and shareholders’ funds stand at £8,501, reflecting positive equity and no apparent reliance on external debt.
  Overall, the company’s financial structure is sound but very modest in scale, consistent with its micro-entity classification.

3. Cash Flow Assessment:
   Current assets exceed current liabilities by more than two-fold, which suggests adequate short-term liquidity to meet immediate obligations. The small scale of operations and absence of significant liabilities reduce risk of cash flow strain in the near term. However, no detailed profit and loss or cash flow statement data is provided, so the ongoing cash generation capacity cannot be fully assessed. Close attention should be paid to working capital cycles and any credit extended to customers as business develops.

4. Monitoring Points:

• Trading performance and profitability trends in the next 12-24 months to establish sustainable cash flows.
• Changes in working capital, particularly debtor collections and creditor payment terms.
• Any increases in external financing and impact on leverage.
• Continuity and capacity of management, currently a single director/shareholder.
• Compliance with timely filing of accounts and confirmation statements to avoid regulatory penalties.