CODEQUAKE LIMITED

Executive Summary

Codequake Limited is showing critical financial distress marked by negative working capital and near depletion of shareholder equity, signaling urgent liquidity and solvency concerns. Immediate actions to improve cash flow, inject capital, and address operational challenges are essential to avoid further decline and restore financial stability. Proactive management and strategic planning will be key to reversing the current downward trend.

CODEQUAKE LIMITED - Analysis Report

Company Number: 14099370

Analysis Date: 2025-07-29 14:04 UTC

Financial Health Assessment: CODEQUAKE LIMITED (as of 31 May 2024)

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1. Financial Health Score: D

Explanation:
The company exhibits worrying signs of financial distress, particularly reflected in a negative net working capital position and a sharp decline in net assets from the previous year. While the company remains active and solvent legally, the financial "vital signs" suggest a fragile state that requires urgent attention.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£17,240	Cash-heavy but reduced significantly from £37,293 (2023). No trade debtors remain, indicating stalled receivables or halted sales on credit.
Current Liabilities	£19,971	Slight decrease but still exceeds current assets, causing negative working capital.
Net Current Assets (Working Capital)	-£2,731	Negative working capital signals cash flow strain to meet short-term obligations — a critical "symptom of distress."
Net Assets (Equity)	£100	Drastic drop from £16,667 in 2023 reflecting accumulated losses or write-downs, dangerously low shareholder buffer.
Share Capital	£100	Minimal capital base, unchanged except for share restructuring; essentially no equity cushion.
Fixed Assets	£2,831	Small tangible assets, depreciating slightly, representing modest investment in fixtures/fittings.
Cash Position	£17,240	Adequate cash on hand but insufficient to cover immediate liabilities, indicating a "thin blood supply" in liquidity terms.
Trade Debtors	£0	No receivables indicating potential halt or significant reduction in sales or credit activity.
Director Loans	£0	No director loans outstanding, so no additional informal funding buffer.
Employees	2	Very small staff base, typical for micro/small entity — operational scale is limited.

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3. Diagnosis

"Symptoms" Observed:

• Negative net current assets: The company’s short-term debts exceed its liquid assets, indicating it may struggle to meet upcoming obligations without raising additional funds or converting assets quickly. This is akin to a patient whose vital signs show poor circulation—cash isn't flowing sufficiently to cover immediate needs.
• Severe erosion of net assets: A collapse from £16,667 to £100 equity suggests the company has incurred significant losses or written down assets. This is a "symptom" of financial deterioration and loss of resilience against shocks.
• No trade debtors: The absence of receivables might reflect either a strategic shift away from credit sales or a cessation in trading activity, which could impact future revenue inflows.
• Cash insufficient to cover liabilities: Though cash on hand is reasonable, it falls short of current liabilities, highlighting liquidity risk.
• Small fixed asset base and workforce: Indicative of a lean operation but also limited capacity for scale or absorbing financial shocks.

Underlying Health Issues:

• The company's liquidity is compromised, putting it at risk of default or needing emergency funding.
• The equity base is virtually depleted, meaning owners have little "buffer" to absorb further losses.
• The business may be facing operational challenges that have led to reduced receivables and cash flow stress.
• While the company is not in liquidation or administration, these financial "symptoms" suggest potential distress without corrective measures.

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4. Recommendations

To restore financial health and improve the prognosis, the company should consider the following actions:

• Immediate Cash Flow Management:

  • Negotiate with creditors to extend payment terms or reduce current liabilities.
  • Explore short-term financing options (e.g., director loans, bank overdrafts) to top up liquidity.
  • Accelerate any possible receivables collection or alternative revenue-generating activities.

• Capital Injection:

  • Consider raising new equity capital to rebuild shareholders’ funds and provide a cushion for operations.
  • Evaluate the possibility of new investors or additional funding from existing shareholders.

• Operational Review:

  • Investigate reasons for no trade debtors—assess sales pipeline and customer engagement to restart or boost revenue flow.
  • Review cost structure and reduce discretionary expenses to preserve cash.

• Strategic Planning:

  • Develop a turnaround plan focusing on restoring positive working capital and profitability.
  • Consider professional advisory support for restructuring and financial forecasting.

• Monitoring and Reporting:

  • Establish more frequent financial monitoring to catch warning signs early and adjust plans accordingly.
  • Keep compliance filings current to maintain good standing and credibility with stakeholders.

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Prognosis

Without swift intervention, the company risks further deterioration leading to insolvency or forced restructuring. However, with focused cash flow management, capital reinforcement, and operational adjustments, there is potential to stabilize and gradually rebuild financial health over the next 12-18 months.

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