VERBALWRECKAGE LTD

Executive Summary

Verbalwreckage Ltd shows a marked decline in financial health with negative net assets and working capital shortfall as of August 2024. The company’s liquidity position is weak, raising concerns about its ability to service debt or absorb shocks. Credit approval is not recommended without evidence of financial restructuring or capital support.

VERBALWRECKAGE LTD - Analysis Report

Company Number: SC741716

Analysis Date: 2025-07-29 17:29 UTC

1. Credit Opinion: DECLINE
   Verbalwreckage Ltd's latest accounts reveal a significant deterioration in financial position with net liabilities of £198 as of August 2024, down from net assets of £100 in the prior year. The company’s current liabilities of £216 substantially exceed its current assets of £18, resulting in negative working capital and indications of liquidity pressure. Given the lack of tangible assets and the negative equity position, the company currently lacks the financial resilience and capacity to service new or existing credit facilities without additional capital injection or turnaround measures.

2. Financial Strength:
   The balance sheet shows a clear weakening with a transition from positive net assets (£100 in 2023) to net liabilities (£-198 in 2024). The absence of fixed assets and minimal current assets (£18) further weakens the asset base. Shareholders’ funds have eroded to a negative figure, reflecting accumulated losses or potentially unreported liabilities. The company is classified as a micro-entity, with only five employees, indicating a small scale of operations. The negative equity position is a red flag from a credit perspective, highlighting poor financial health.

3. Cash Flow Assessment:
   The working capital deficit (current liabilities exceed current assets by £198) signals insufficient liquidity to meet short-term obligations. The small amount of current assets suggests limited cash or receivables to convert into cash quickly. Without cash flow support or funding, the company may struggle to meet day-to-day operating expenses or debt repayments. No audit report or cash flow statement is provided, but the balance sheet position strongly implies cash flow constraints.

4. Monitoring Points:

• Track liquidity ratios closely, especially current ratio and quick ratio, in the next accounts.
• Monitor timely payment of trade creditors and any delayed or defaulted payments.
• Review any new capital injections, shareholder loans, or refinancing efforts to restore equity.
• Watch for any director or related party transactions that may affect financial stability.
• Observe business performance metrics linked to the artistic and sound recording sectors for revenue growth or decline trends.