Company Number: 13107154

Analysis Date: 2025-07-29 19:51 UTC

1. Credit Opinion: DECLINE
   Verrechia Electrical Ltd demonstrates weakening financial stability with net current liabilities reported in the latest year (£126 adverse working capital), a substantial decline from the prior year’s positive net current assets (£281). Net assets have also decreased significantly from £879 to £365, reflecting erosion of equity and a reduction in creditor cover. The company currently employs no staff besides the director, indicating minimal operational scale and potential vulnerability. The absence of an audit and very small share capital (£100) further reduce financial transparency and buffer capacity. These factors suggest limited ability to service debt or withstand economic stress, warranting a decline for credit extension without substantial improvement or guarantees.

2. Financial Strength:
   The balance sheet shows very limited fixed assets (£491) and a small asset base overall. The company’s current liabilities slightly exceed current assets, resulting in negative net working capital. Total liabilities have decreased, but this is due to the elimination of long-term creditors (£625 in 2023 to zero in 2024), possibly indicating repayment or restructuring. Equity has fallen sharply to £365, reflecting accumulated losses or withdrawals. The micro-entity status and minimal capital structure imply a fragile financial foundation with negligible reserves for contingencies.

3. Cash Flow Assessment:
   Current assets primarily consist of cash and short-term receivables (£16,724), but they are insufficient to cover current liabilities (£16,850). Negative net current assets signal potential liquidity strain, which could impede meeting short-term obligations promptly. The decline from a positive working capital position in prior years indicates deteriorating cash flow management or operational challenges. The lack of employees may suggest outsourcing or limited business activity, which can both reduce overhead but also limit revenue generation and cash inflows.

4. Monitoring Points:

• Track changes in net current assets to ensure working capital improves and remains positive.
• Monitor net assets and shareholder funds for signs of erosion or replenishment.
• Review director’s plans or additional capital injections given the low share capital and equity base.
• Observe any changes in creditor terms or repayment schedules, especially as there are no long-term creditors reported currently.
• Assess operational scale and revenue trends as the company currently reports no staff, which may impact sustainability.
• Confirm timely filing of accounts and returns continues to maintain transparency.