DRAUP INC LTD

Executive Summary

DRAUP INC LTD has experienced a marked weakening in financial position over the last year, with net liabilities and negative working capital raising concerns over its ability to meet obligations. The substantial drop in cash reserves and equity deficit reflect operational or financial strain. Credit approval is declined pending evidence of improved liquidity and capitalization.

DRAUP INC LTD - Analysis Report

Company Number: 14195052

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

1. Credit Opinion: DECLINE
   DRAUP INC LTD shows significant deterioration in financial health over the latest year. The company moved from a positive net asset position of £206,917 in 2022 to a negative net asset position of £124,868 in 2023. Current liabilities exceed current assets by £124,868, indicating severe short-term liquidity pressure. This negative working capital and net liabilities position suggest the company may struggle to meet its short-term obligations without additional funding or operational improvement. The large negative shareholders’ funds (£580,968 deficit in retained earnings) further weaken the equity base. Given these factors, the risk of default is elevated, and credit approval is not recommended at this time.

2. Financial Strength:
   The balance sheet reveals a sharp decline in net current assets from £206,917 positive in 2022 to a negative £124,868 in 2023. Cash reserves have dropped drastically from £364,509 to £39,471, further straining liquidity. The company’s liabilities, primarily amounts owed to a related group undertaking (£161,284), are substantial and increasing. The equity deficit and erosion of retained earnings point to ongoing losses and insufficient capital buffer. This weak financial structure diminishes resilience to economic or operational shocks.

3. Cash Flow Assessment:
   The very low cash balance against significant current liabilities signals a stressed liquidity position. Negative net current assets indicate that short-term liabilities exceed readily available assets, implying reliance on external financing or credit terms extension to manage day-to-day operations. The increase in amounts owed to related parties also indicates possible funding difficulties. Without clear evidence of improving cash flow generation or capital injection, the company’s ability to service debt is doubtful.

4. Monitoring Points:

• Monitor cash balances and working capital trends quarterly to detect further deterioration.
• Review related party debt levels and repayment plans to understand funding sustainability.
• Track profitability and retained earnings movement in future accounts to assess recovery prospects.
• Watch for any changes in director appointments or company status that may signal distress.