CATT2 INTL LTD

Executive Summary

CATT2 INTL LTD faces liquidity challenges and negative net assets, signaling financial distress. Immediate focus on improving cash flow, reducing liabilities, and capital strengthening is essential to stabilize the company. With prompt action, there is potential for recovery despite current financial strain.

CATT2 INTL LTD - Analysis Report

Company Number: SC680231

Analysis Date: 2025-07-20 13:50 UTC

Financial Health Assessment: CATT2 INTL LTD

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1. Financial Health Score: D

Explanation:
The company shows significant signs of financial distress with negative net current assets and net liabilities at the last financial year-end. While it is still active, the working capital position has deteriorated sharply, indicating liquidity challenges. The score D reflects a warning status where urgent attention is needed to restore financial stability.

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2. Key Vital Signs

Metric	2023-10-31	Interpretation
Current Assets	£34,628	Cash and short-term assets have increased but remain modest.
Current Liabilities	£57,043	Short-term debts have nearly doubled, outstripping assets.
Net Current Assets	-£22,415	Negative working capital, indicating inability to cover short-term liabilities. This is a critical symptom of liquidity stress.
Net Assets (Equity)	-£22,415	Negative net worth means liabilities exceed assets—sign of financial distress.
Share Capital	£99	Very low capital base, typical of a micro entity.
Employees	1	Small scale operation.

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3. Diagnosis

Symptoms Analysis:

• The company’s balance sheet paints a picture of a "patient" with a weakened circulatory system—cash and receivables (current assets) are insufficient to meet immediate debt obligations (current liabilities).
• The negative net current assets (-£22,415) mean the company is essentially operating with a "cash flow deficit," risking inability to meet creditor demands on time.
• The worsening from a marginal negative net current asset position (-£282 in 2022) to a larger deficit in 2023 signals progressive financial health decline.
• Negative net assets (shareholders' funds) suggest accumulated losses or liabilities exceeding the value of owned assets, which is a key indicator of insolvency risk if not corrected.
• The company operates at micro scale with minimal capital and a single employee, limiting resources to absorb shocks or invest in growth.

Underlying Issues:

• Overextension of short-term liabilities relative to liquid assets.
• Limited capital injection or retained earnings to strengthen equity position.
• Possible operational inefficiencies or insufficient revenue generation to support liabilities.
• Vulnerability to external shocks due to small scale and lean structure.

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4. Recommendations

Immediate Actions:

• Improve Liquidity: Seek to convert non-cash current assets faster or negotiate extended payment terms with creditors to alleviate short-term pressure.
• Capital Injection: Consider additional shareholder funding or loans to restore positive net assets and support working capital needs.
• Cost Control: Review and reduce operating expenses to improve cash flow health.
• Revenue Enhancement: Explore new sales channels or increase activity within the industry (agents for furniture and household goods) to boost turnover.

Medium to Long Term:

• Financial Monitoring: Establish regular cash flow forecasting and tighter financial controls to catch symptoms early.
• Business Model Review: Assess profitability of core activities and explore diversification or strategic partnerships to stabilize income.
• Stakeholder Communication: Maintain transparency with creditors and investors about financial health and recovery plans to build trust.
• Professional Advice: Engage financial advisors to restructure debts or optimize tax and accounting practices.

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Summary:
CATT2 INTL LTD currently exhibits critical symptoms of financial distress, primarily due to negative working capital and net liabilities. Without prompt remedial action, the prognosis points toward increased risk of insolvency. However, with targeted liquidity improvements and capital support, recovery is feasible given its micro-entity scale and focused business niche.

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