DRAW A LINE COACHING LTD
Executive Summary
Draw A Line Coaching Ltd is currently dormant with ongoing negative net assets and reliance on director loans, indicating a high solvency risk and lack of operational activity. While compliance with statutory filings and governance appear satisfactory, the absence of trading revenue and persistent net liabilities present substantial concerns for financial sustainability. Further investigation into director loan arrangements and future business plans is recommended to clarify the company's prospects.
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This analysis is opinion only and should not be interpreted as financial advice.
DRAW A LINE COACHING LTD - Analysis Report
- Risk Rating: HIGH
Justification: Draw A Line Coaching Ltd exhibits significant financial distress as evidenced by persistent net liabilities and reliance on director loans. The company is dormant operationally with no employees and no trading activity reported, raising concerns about its ability to meet obligations and sustain operations.
- Key Concerns:
- Negative Shareholders’ Funds: The company shows net liabilities of approximately £13,636 each year from 2021 through 2024, indicating ongoing losses or insufficient capital injection.
- Reliance on Director Loans: Long-term creditors consist mainly of loans from directors (£14,316), suggesting dependence on insider financing rather than external borrowing or trading revenue.
- Dormant Status with No Trading Activity: The company is categorized as dormant, with zero employees and no reported cash inflows, implying no active business operations or revenue generation to support liabilities.
- Positive Indicators:
- Compliance with Filing Requirements: The company has up-to-date statutory filings including accounts and confirmation statements, with no overdue filings or penalties.
- Clear Corporate Governance: The sole director is identified with no disqualifications or governance issues noted, implying responsible management oversight.
- Tangible Asset Base: The company holds computer equipment valued at £880 net book value, providing some asset backing despite limited scale.
- Due Diligence Notes:
- Investigate the nature and terms of director loans to assess repayment likelihood and potential impact on solvency.
- Confirm if there are any plans or recent developments to activate trading or raise capital to reverse net liabilities.
- Review historic cash flow statements or bank statements (if available) to understand liquidity dynamics despite dormant status.
- Evaluate whether the company intends to remain dormant long-term or if the current financial position is transitional.
- Ascertain if any contingent liabilities or off-balance sheet obligations exist which could further impair financial stability.
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