CASTLE SUPPLIES (GLASGOW) LIMITED

Executive Summary

CASTLE SUPPLIES (GLASGOW) LIMITED exhibits severe financial distress with negative net assets and working capital, indicating urgent liquidity and solvency challenges. Immediate action is required to improve cash flow, reduce liabilities, and consider capital infusion to restore financial stability. Without corrective measures, the company’s viability is at risk despite being a newly formed micro-entity.

CASTLE SUPPLIES (GLASGOW) LIMITED - Analysis Report

Company Number: SC775757

Analysis Date: 2025-07-29 14:04 UTC

Financial Health Assessment Report for CASTLE SUPPLIES (GLASGOW) LIMITED

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1. Financial Health Score: Grade F

Explanation:
The company exhibits significant financial distress indicated by a negative net asset position and negative working capital. The liabilities and provisions exceed current assets by a wide margin, signaling a critical liquidity and solvency issue. Given the data, the company’s financial health is poor and requires urgent attention.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	0	No long-term assets, possibly indicating no investment in property or equipment yet.
Current Assets	2,451	Very low current assets, showing limited liquidity resources available in the short term.
Current Liabilities	25,267	Substantial short-term obligations, far exceeding current assets.
Net Current Assets (Working Capital)	-22,816	Negative working capital, a strong symptom of liquidity distress.
Total Net Assets	-23,600	Negative equity, indicating the company owes more than it owns — a serious solvency symptom.
Shareholders’ Funds	-23,600	Reflects accumulated losses or capital deficiency, undermining the financial foundation.
Employees	2	Small workforce consistent with micro-entity status, but fixed costs may weigh heavily.

Interpretation:

• The absence of fixed assets suggests the company may be newly established or asset-light.
• Current liabilities far exceed current assets, highlighting an inability to cover short-term debts from available liquid resources.
• Negative net assets reflect a balance sheet insolvency, often a critical red flag for creditors and investors.
• The micro-entity classification aligns with the company's small scale but does not mitigate the financial stress shown.

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3. Diagnosis: Financial Condition Overview

The company is in a state comparable to a patient exhibiting severe symptoms of financial distress:

• Liquidity Crisis: The negative working capital is akin to a patient with insufficient blood flow — the company lacks the immediate financial resources (cash or equivalents) to meet its imminent obligations. This "circulatory failure" threatens ongoing operations.
• Balance Sheet Insolvency: Negative net assets represent a "structural weakness," where the company’s debts outweigh its assets. This is a critical condition that may lead to insolvency proceedings if not addressed.
• Early Stage Operations: The lack of fixed assets and micro-entity status suggests the company is in its infancy or minimal operations phase, potentially explaining the initial losses or capital shortfall. However, this does not excuse the urgent need for financial stabilization.
• Owner Concentration: Greg Morrison holds full control and majority voting rights, implying decision-making is centralized, which can be both a strength for swift action or a risk if not managed prudently.

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4. Recommendations: Prescriptions for Financial Recovery

To nurse the company back to health, the following steps are critical:

1. Immediate Cash Flow Management:

   • Negotiate with creditors to restructure or delay current liabilities to reduce immediate pressure.
   • Increase cash inflows through sales acceleration or short-term financing.

2. Capital Injection:

   • The sole shareholder or external investors should consider injecting fresh equity capital to restore positive net assets and working capital.

3. Cost Control:

   • Review and reduce operational expenses, including employee costs, to improve the cash burn rate.

4. Asset Strategy:

   • Consider acquiring essential fixed assets if they improve operational efficiency and profitability, but avoid unnecessary capital expenditure.

5. Financial Monitoring:

   • Implement rigorous cash flow forecasting and financial reporting to detect early warning signs promptly.

6. Business Model Review:

   • Assess the viability of the current business model in plaster product manufacturing; explore market positioning, pricing, and sales strategies to enhance revenue.

7. Professional Advice:

   • Engage with insolvency practitioners or financial advisors early if turnaround plans do not materialize, to avoid forced liquidation or administration.

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