CONNECTING CANVASES LTD

Executive Summary

CONNECTING CANVASES LTD is currently facing significant financial challenges characterized by negative net assets, persistent working capital deficits, and zero current assets, reflecting liquidity and solvency issues. Without immediate corrective actions such as capital infusion and improved cash management, the company risks ongoing financial distress. A strategic operational and financial review is imperative to restore financial health and ensure sustainability.

CONNECTING CANVASES LTD - Analysis Report

Company Number: 12553092

Analysis Date: 2025-07-20 11:13 UTC

Financial Health Assessment of CONNECTING CANVASES LTD

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1. Financial Health Score: D

Explanation:
The company shows persistent negative net current assets (working capital deficit) and net liabilities over multiple years, despite a slight improvement in 2024. This indicates ongoing financial strain, with insufficient short-term assets to cover immediate liabilities. The micro-entity scale limits complexity, but the negative equity position ("capital and reserves") signals underlying financial distress. The absence of employees and minimal cash further highlight operational challenges. Hence, the score is D, reflecting below-average financial health with significant risks.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Current Assets	0	No short-term liquid assets; unhealthy sign.
Current Liabilities	8,530	Debts due within one year remain high.
Net Current Assets	-8,530	Working capital negative, indicates liquidity issues.
Total Assets Less Current Liabilities	-8,430	Negative, assets insufficient to cover short-term debt.
Net Assets / Shareholders' Funds	-8,580	Negative equity, indicates accumulated losses or liabilities exceeding assets.
Average Number of Employees	0	No staff, possibly no active operations.
Share Capital	100	Very small capital base.

Interpretation:

• Liquidity ("healthy cash flow"): The company has no current assets in 2024, which implies no cash or receivables to meet short-term obligations. This is a critical "symptom of distress."
• Solvency: Negative net assets and shareholders’ funds over recent years show solvency issues—liabilities outweigh assets.
• Operational Activity: No employees reported, and current assets dropped to zero, suggesting minimal or no trading activity.
• Trend: The company fluctuates between negative and positive net current assets historically, but the 2024 position is the worst, with zero current assets and still high liabilities.

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3. Diagnosis

Underlying Condition:
The company is experiencing financial distress, primarily due to ongoing liquidity and solvency challenges. The absence of current assets in 2024 contrasted with substantial current liabilities suggests an inability to meet short-term debts without additional funding. Negative shareholders’ funds confirm accumulated losses or debts exceeding assets, a serious "health" concern.

Potential Causes:

• Limited or no revenue generation, as indicated by minimal cash and no employees.
• Possibly unpaid creditors or deferred liabilities accruing over time.
• The micro-entity status and no audit suggest limited external financial scrutiny, but also limited resources.

Business Health:
Overall, the company appears to be in a fragile state, with symptoms consistent with a business struggling to maintain ongoing operations. The negative net assets and working capital deficits are warning signs of financial instability that could lead to insolvency without corrective measures.

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4. Recommendations

1. Improve Liquidity

   • Inject additional working capital through shareholder loans or equity contributions.
   • Accelerate collection of any receivables or convert assets to cash.
   • Negotiate payment terms with creditors to reduce immediate outflows.

2. Operational Review

   • Assess business model viability and revenue streams to generate sustainable cash flow.
   • Consider cost controls or restructuring to reduce liabilities and operating expenses.

3. Financial Monitoring

   • Implement rigorous cash flow forecasting and financial controls to detect distress signals early.
   • Prepare more detailed financial statements to better understand cost drivers and asset utilization.

4. Professional Advice

   • Engage with insolvency practitioners or financial advisors to explore restructuring or turnaround options if cash flow does not improve.
   • Consider formal restructuring to avoid liquidation if the business is viable.

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