CF&MK LIMITED

Executive Summary

CF&MK Limited is currently experiencing significant financial distress characterized by negative working capital and shareholders’ funds. The company remains operational due to extended credit from a key supplier-shareholder, but this is a fragile lifeline. Immediate measures to improve cash flow, negotiate creditor terms, and inject capital are critical to restoring financial health and ensuring long-term viability.

CF&MK LIMITED - Analysis Report

Company Number: 12526024

Analysis Date: 2025-07-20 15:39 UTC

Financial Health Assessment for CF&MK Limited (as of 31 March 2024)

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1. Financial Health Score: D

Explanation:
CF&MK Limited is currently showing significant financial distress indicated by negative net current assets and shareholders funds. The company’s liabilities exceed its assets, resulting in a negative equity position. This is a symptom of financial strain, though the company continues to operate due to supportive credit terms from a key supplier-shareholder. The overall financial health is weak but not yet terminal, warranting urgent attention.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	36,764	Current assets have modestly increased, indicating some short-term resources available.
Cash Balance	7,756	Cash on hand is low, restricting liquidity flexibility.
Debtors	24,508	High debtor level suggests sales on credit; risk of delayed cash inflow.
Current Liabilities	45,533	Significant short-term obligations, creating liquidity stress.
Net Current Assets	-8,769	Negative working capital indicates inability to cover short-term debts with current assets.
Total Assets less Current Liabilities	-7,982	Negative figure shows overall asset base is insufficient to cover current debts.
Shareholders’ Funds (Equity)	-8,132	Negative equity signals accumulated losses exceeding capital invested.
Trend (Net Current Assets 2023: -19,892 → 2024: -8,769)	Improving	Slight improvement in working capital, but still negative and risky.
Supportive Credit Terms	Yes	Continued favorable credit from key supplier-shareholder (Manchester Print Service Ltd) is critical for going concern.

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3. Diagnosis

CF&MK Limited exhibits chronic financial distress symptoms. The company has been operating with negative net current assets and shareholders funds for multiple years, indicating ongoing losses or capital erosion. Despite this, the company remains active primarily due to extended credit terms from a supplier-shareholder, a vital lifeline akin to a patient on life support.

The cash position is weak and insufficient to provide a buffer against unforeseen expenses or downturns. High levels of trade creditors relative to current assets create a liquidity crunch, meaning the company may struggle to meet short-term obligations without additional credit or capital injection.

The improvement in net current assets compared to the previous year suggests some recovery or better management of working capital, but this remains inadequate to restore financial health fully. The company’s reliance on favorable supplier credit terms is a risk factor: if these terms deteriorate, CF&MK could face severe cash flow problems.

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4. Recommendations

To restore financial wellness and avoid worsening symptoms, the company should consider the following actions:

• Strengthen Cash Flow Management:
  Implement tighter controls on debtor collections to convert sales into cash faster and reduce days sales outstanding.

• Negotiate with Creditors:
  Explore restructuring payment terms with trade creditors beyond the current key supplier to ease monthly cash flow pressures.

• Seek Capital Injection:
  Consider raising additional equity or long-term debt to improve the balance sheet and move out of negative equity territory. This can provide a "financial transfusion" to stabilize operations.

• Cost Control and Efficiency Review:
  Assess operating expenses and reduce non-essential costs to improve profitability and preserve cash reserves.

• Monitor Supplier Relationship:
  Maintain strong communication with the key supplier-shareholder (Manchester Print Service Ltd) to ensure continued favorable credit terms.

• Prepare for Contingencies:
  Develop a cash flow forecast and contingency plans for potential liquidity crunches or credit disruptions.

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Medical Analogy Summary

CF&MK Limited is akin to a patient with a chronic condition marked by insufficient "circulation" of cash (liquidity) and weakened "organs" (negative equity). While the "life support" provided by a supportive supplier-shareholder is keeping it operational, the underlying financial health requires urgent intervention to prevent "collapse." Without improvements in liquidity, capital structure, and operational efficiency, the prognosis remains guarded.

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