CS MUNCH LIMITED

Executive Summary

CS MUNCH LIMITED currently exhibits severe financial distress, with a sharply negative net asset position and acute liquidity problems indicating a high risk of insolvency. Immediate remedial action focusing on cash flow management, balance sheet restructuring, and operational efficiency is essential to restore financial health and ensure business continuity.

CS MUNCH LIMITED - Analysis Report

Company Number: 12409823

Analysis Date: 2025-07-20 18:28 UTC

Financial Health Assessment for CS MUNCH LIMITED

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1. Financial Health Score: D

Explanation:
The company shows a significant deterioration in its financial position over the latest year, moving from a modestly positive net asset position (£4,235 in 2023) to a large net liability position (-£32,128 in 2024). This signals severe financial distress, akin to a patient whose vital signs have sharply declined. While the business is still active, the current financial data reveals symptoms of imbalance and potential insolvency risk.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£1,556	Minimal long-term asset base; slight decrease from prior year.
Current Assets	Not reported (0)	Absence of reported current assets is a red flag, indicating no liquid assets or receivables.
Current Liabilities	£33,684	Substantial short-term debts due within one year; increased more than 5-fold from last year.
Net Current Assets/(Liabilities)	-£33,684	Negative working capital indicating inability to cover short-term debts with short-term assets.
Net Assets (Shareholders Funds)	-£32,128	Negative equity reflects accumulated losses or financial strain, a symptom of distress.
Share Capital	£2.00	Nominal equity investment, typical for micro entities but insufficient to absorb losses.
Employees	1	Very small operational scale; limits potential for revenue generation.

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3. Diagnosis

• Symptoms Analysis:

  • Severe liquidity crunch: Negative net current assets indicate the company cannot meet its short-term obligations from available liquid assets, a critical sign of financial distress.
  • Negative net assets: The company’s liabilities outweigh its assets by over £30k, showing erosion of shareholder equity and a potential insolvency threat.
  • Declining fixed assets: Slight reduction in fixed assets may reflect asset disposals or depreciation, but this is minor compared to liquidity troubles.
  • Operating scale: With only one employee and micro-entity classification, the business has limited operational capacity to generate revenues to reverse the trend.
  • Recent management changes: The appointment of a new director in late 2023 suggests possible restructuring or attempts to address challenges.

• Underlying Business Health:
  The financial data portrays a "patient" suffering from acute financial stress with a weakened balance sheet and liquidity crisis. The absence of current assets in 2024 could indicate issues such as delayed payments, inventory depletion, or accounting/reporting limitations. The rapid increase in current liabilities suggests mounting debts or unpaid obligations.

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4. Recommendations

• Immediate cash flow management:
  Prioritize improving liquidity by accelerating receivables collection, negotiating extended payment terms with creditors, or securing short-term financing. This is critical to stabilise the "circulatory system" of the business.

• Balance sheet restructuring:
  Consider equity infusion or debt restructuring to reduce the negative net asset position. Engaging with shareholders or investors may be necessary to "inject fresh blood" into the business.

• Operational review:
  Evaluate business model, cost structure, and revenue streams. Given the micro scale, focus on efficient operations and potentially scaling activities to restore healthy cash inflows.

• Professional advice:
  Engage insolvency or turnaround specialists early to explore all options and avoid uncontrolled deterioration.

• Regular monitoring:
  Implement strict financial monitoring protocols to detect early warning signs and manage risks proactively.

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