CKR INVESTMENTS LIMITED

Executive Summary

CKR INVESTMENTS LIMITED shows symptoms of financial distress with negative working capital and net liabilities, despite holding substantial investment property assets. Urgent actions to improve liquidity, restructure debt, and optimize asset use are recommended to restore financial stability and support ongoing operations.

CKR INVESTMENTS LIMITED - Analysis Report

Company Number: 14357756

Analysis Date: 2025-07-29 17:25 UTC

Financial Health Assessment of CKR INVESTMENTS LIMITED

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1. Financial Health Score: D

Explanation:
The company’s financial health shows clear symptoms of distress, primarily due to significant negative working capital and net liabilities despite holding a substantial investment property asset. This grade reflects the precarious liquidity position and reliance on secured debt, which may impact operational flexibility and solvency risks if not managed carefully.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	3,053	Very low liquid assets relative to liabilities; indicates limited cash buffer.
Cash at Bank	2,550	Minimal cash on hand; potentially insufficient for near-term obligations.
Current Liabilities	455,625	Extremely high current liabilities compared to assets; indicates liquidity strain.
Net Current Assets (Working Capital)	-203,374	Negative working capital; a critical symptom of cash flow problems and short-term financial stress.
Fixed Assets (Investment Property)	643,045	Strong long-term asset base, but illiquid and encumbered by secured debt.
Total Liabilities	661,952 (current + long term)	High total liabilities exceeding assets, creating negative net asset position.
Net Assets (Equity)	-15,954	Negative net equity; indicates liabilities exceed assets, a sign of financial distress.
Shareholders Funds	-16,054	Reflects accumulated losses or negative retained earnings.

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3. Diagnosis: Financial Condition Overview

• Liquidity Crisis: The company exhibits a dangerously low liquidity position, with cash and current assets unable to cover even a fraction of current liabilities. This is akin to a patient with a dangerously low blood pressure—immediate attention is needed to prevent collapse.

• Leverage and Solvency Risk: The company’s balance sheet shows a heavy reliance on bank loans secured against its investment property. While the property value is healthy, the secured debt (over £455k) almost equals the property value, leaving little equity cushion. This represents a high leverage ratio and risk of insolvency if property values decline or debt repayment accelerates.

• Working Capital Deficiency: Negative net current assets (working capital) highlight ongoing cash flow challenges, implying the company may struggle to meet day-to-day operational expenses without additional funding or asset liquidation.

• Equity Deficit: Negative shareholders’ funds signal accumulated losses or capital erosion, an alarming symptom that the company’s net worth is below zero, which could affect creditor confidence and borrowing capacity.

• Going Concern Considerations: The directors’ note states the accounts are prepared on a going concern basis, suggesting they believe the company will meet its liabilities. However, the financial “symptoms” suggest tight conditions that require active management.

• No Audit Requirement: As a small private company with exemption from audit, the financial statements have not been audited, which increases the importance of scrutinizing the financial health carefully.

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4. Recommendations: Actions to Improve Financial Wellness

1. Improve Liquidity:

   • Seek short-term cash injections through shareholder loans, equity investment, or sale of non-core assets to build a healthier cash buffer.
   • Negotiate extended payment terms with creditors where possible to reduce immediate cash outflows.

2. Debt Restructuring:

   • Engage with the lending bank to explore restructuring or refinancing the secured loan to reduce current liability pressure.
   • Evaluate the feasibility of converting short-term debts into longer-term obligations to ease liquidity strain.

3. Asset Utilization:

   • Consider monetizing part or all of the investment property if operational liquidity cannot be restored otherwise.
   • Explore rental income generation or other revenue streams from the property to improve recurring cash inflows.

4. Financial Monitoring and Reporting:

   • Implement rigorous cash flow forecasting and financial controls to detect and manage liquidity risks proactively.
   • Regularly update stakeholders on financial health and remedial measures being taken.

5. Governance and Strategic Review:

   • Given the high leverage, conduct a strategic review of business operations and capital structure.
   • Consider bringing in financial advisors or turnaround specialists to assist with recovery planning.

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Summary

CKR INVESTMENTS LIMITED is currently facing significant financial stress mainly due to large current liabilities exceeding its liquid assets and a negative equity position, despite owning valuable property. Immediate focus on liquidity improvement and debt management is essential to stabilize the company’s financial health and ensure ongoing viability.