CRUSTS AND CRUMBS LTD

Executive Summary

Crusts and Crumbs Ltd demonstrates a weak financial position marked by growing net liabilities, negative working capital, and low cash reserves. Reliance on director loans and deteriorating equity suggest limited capacity to support new credit without substantial turnaround. Credit exposure is high risk and not recommended for approval without significant improvement in financial health and cash flow.

CRUSTS AND CRUMBS LTD - Analysis Report

Company Number: 13917727

Analysis Date: 2025-07-20 16:19 UTC

1. Credit Opinion: DECLINE. Crusts and Crumbs Ltd exhibits significant financial distress with negative net assets and shareholders' funds worsening from -£11,851 (Mar 2023) to -£33,181 (Aug 2024). The company has a director's loan liability increasing to over £33k, indicating reliance on shareholder funding rather than operational cash flows. Current liabilities exceed current assets, and net current liabilities are increasing, raising concerns about the company’s ability to meet short-term obligations. The recent change in director and full ownership transfer to Mohammed Imran also introduces some management continuity risk. Overall, the company's financial position is weak and suggests limited capacity to service new or extended credit.

2. Financial Strength: The balance sheet shows net liabilities of £33,181 as of August 2024, worsening from prior periods. Tangible fixed assets have been fully depreciated or disposed of, leaving no net fixed asset base. Current liabilities of £33,181 exceed current assets, resulting in negative working capital. The director’s loan of £33,181 represents a significant interest-free or possibly informal borrowing, which may not be sustainable. The absence of equity and persistent losses reflected in the negative profit and loss reserve undermine financial stability. This indicates a fragile capital structure with no buffer against trading setbacks.

3. Cash Flow Assessment: Cash at bank is low at £779 (Aug 2024), reduced from £5,001 in March 2023, reflecting deteriorating liquidity. Negative net current assets (-£5,178) and high short-term creditor balances (including VAT owed in the previous period) highlight tight working capital constraints. The company appears to be dependent on director loans to finance operations rather than generating positive operating cash flow. This lack of liquidity poses a risk to meeting short-term liabilities and ongoing operational needs.

4. Monitoring Points:

• Monitor cash flow trends and liquidity monthly to detect further deterioration.
• Watch director’s loan increases and any changes in repayment terms or additional funding.
• Track profitability improvements or further losses in upcoming accounts.
• Review management changes and assess impact on operational and financial controls.
• Keep close scrutiny on overdue creditors and VAT liabilities to avoid enforcement actions.