CHAOS GROUP CORNWALL LTD

Executive Summary

CHAOS GROUP CORNWALL LTD is currently experiencing financial distress, characterized by negative net assets and inadequate short-term liquidity. The company’s limited trading activity and equity deficit signal urgent need for capital infusion and revenue enhancement. Proactive financial and operational management is essential to restore stability and improve its financial health trajectory.

CHAOS GROUP CORNWALL LTD - Analysis Report

Company Number: 14182536

Analysis Date: 2025-07-29 17:51 UTC

Financial Health Assessment for CHAOS GROUP CORNWALL LTD
(Period Ending 31 August 2023)

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1. Financial Health Score: D (Distressed Condition)

Explanation:
The company exhibits significant financial stress, with negative net assets and current liabilities exceeding current assets, indicating liquidity challenges and an equity deficit. These symptoms suggest the business is not in a healthy financial state and requires urgent attention to avoid further deterioration.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Debtors (Receivables)	100	Very low short-term cash inflows expected
Current Liabilities	1,232	Obligations due within one year exceed assets
Net Current Assets	-1,132	Negative working capital; liquidity shortage
Investments (Fixed Assets)	200	Minimal long-term asset base
Total Assets Less Current Liabilities	-932	Negative indicates liabilities exceed assets
Net Assets (Shareholders’ Funds)	-1,832	Equity deficit; company owes more than owns
Called-up Share Capital	100	Minimal capital invested by shareholders
Retained Earnings	-1,932	Accumulated losses exceeding capital
Number of Employees	0	No staff, potentially minimal operational activity

Interpretation:

• Liquidity distress: Negative net current assets (-£1,132) means the company doesn’t have enough short-term assets to cover immediate debts. This is akin to a patient with insufficient blood flow to vital organs — a critical symptom of financial illness.
• Balance Sheet weakness: Negative net assets (-£1,832) reflect that the company’s obligations exceed the value of its assets — a sign of insolvency risk.
• Minimal operating activity: No staff employed and nominal debtors indicate either very early-stage operations or inactivity, limiting cash inflows.
• Shareholders’ funds deficit: The negative retained earnings suggest accumulated losses, which is like a patient with a chronic condition worsening over time.
• Going concern note: Directors have prepared accounts on a going concern basis, but the financials show stress symptoms that warrant close monitoring.

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3. Diagnosis

CHAOS GROUP CORNWALL LTD is in a financially distressed condition. The company’s negative working capital reveals an inability to meet short-term obligations from existing liquid resources, which is a core "vital sign" of financial health. The negative net assets indicate an equity deficit, meaning creditors’ claims exceed asset values. These are classic "symptoms of distress" that suggest the company is either in early development with initial losses or facing operational and financial difficulties.

The lack of employees and negligible trade debtors imply the company has minimal trading activity or revenue generation currently, which restricts its ability to generate healthy cash flow. The small investment in fixed assets (investments at £200) provides little buffer or productive capacity.

Overall, the company’s financial structure resembles a patient with weak circulation and low energy reserves — vulnerable and in need of intervention.

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4. Recommendations

To improve financial wellness and recover from current distress symptoms, the company should consider the following actions:

1. Increase Working Capital:

   • Inject fresh capital from shareholders or external investors to cover current liabilities and restore positive net current assets.
   • Negotiate extended payment terms with creditors to ease short-term liquidity pressures.

2. Boost Revenue Generation:

   • Initiate or accelerate trading activities to generate receivables and cash inflows, addressing the minimal debtors balance.
   • Explore strategic partnerships or contracts aligned with the company’s community-focused mission to create steady income streams.

3. Cost Management:

   • Maintain minimal fixed overheads (currently zero employees is positive from a cost perspective) but plan for strategic hires only when sustainable revenues are secured.

4. Financial Monitoring and Reporting:

   • Implement regular cash flow forecasting to anticipate liquidity crunches early.
   • Seek professional advice on restructuring options if losses continue or liabilities increase.

5. Governance and Transparency:

   • Ensure directors actively monitor financial health and communicate plans to stakeholders to maintain confidence.

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