CASTROOMS LTD

Executive Summary

Castrooms Ltd is experiencing significant financial deterioration, characterized by negative net current assets and shareholders’ funds, compounded by minimal cash reserves and rising liabilities. The company’s liquidity position is weak, and its ability to service debt or meet short-term obligations is highly questionable. Credit facilities cannot be recommended without substantial evidence of financial restructuring or capital infusion.

CASTROOMS LTD - Analysis Report

Company Number: 13540855

Analysis Date: 2025-07-20 14:40 UTC

1. Credit Opinion: DECLINE
   Castrooms Ltd demonstrates significant financial distress, evidenced by a deterioration from a positive net current asset position of £37,511 in 2022 to a net current liability position of £103,785 in 2023. The shareholders’ funds have turned deeply negative (£-271,464), indicating accumulated losses and erosion of equity. Current liabilities have nearly tripled year on year, primarily due to a substantial increase in "other creditors," including director’s advances, which raises concerns about the company's ability to meet short-term obligations. Given the negative working capital and lack of liquid cash (£502 at year-end 2023), the company is at high risk of default on credit facilities.

2. Financial Strength:
   The balance sheet shows weak financial strength. Fixed assets are minimal (£7,320) and have limited liquidity. The company’s net asset position has swung from a positive £44,207 in 2022 to a negative £96,465 after current liabilities in 2023. The drastic increase in current liabilities (£145,084) compared to current assets (£41,299) is alarming, especially with negligible cash reserves. The negative shareholders’ funds reflect accumulated losses and no retained earnings cushion. The reliance on director loans (£110,374 owed by the director) further signals financial vulnerability and possible funding challenges.

3. Cash Flow Assessment:
   Liquidity is severely constrained. Cash at bank dropped from £40,273 in 2022 to just £502 by the end of 2023. Debtors have decreased moderately but remain significant (£40,797), which may not be readily collectible given the company’s financial distress. The large increase in current liabilities suggests the company is struggling to pay suppliers and other creditors on time. Negative net current assets highlight inadequate working capital management, raising concerns over day-to-day operational cash flow sufficiency.

4. Monitoring Points:

• Monitor the trend in current liabilities, particularly "other creditors" and director advances, to ensure they are controlled or reduced.
• Watch cash balances and cash flow statements closely to assess liquidity improvements or further deterioration.
• Track debtor collection efficiency to convert receivables into cash promptly.
• Observe any new capital injections or restructuring measures to restore equity and operational viability.
• Review director conduct and related party transactions for potential conflicts or further financial support requirements.