Company Number: NI698190

Analysis Date: 2025-07-20 11:16 UTC

Financial Health Assessment of GRAPHIC CRAFT LIMITED as of 30 June 2024

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1. Financial Health Score: D

Explanation:
GRAPHIC CRAFT LIMITED shows significant financial distress at this early stage of its existence. The company’s net liabilities and negative working capital indicate poor liquidity and solvency. While this is not uncommon for a newly incorporated micro-entity, the severity of the negative net assets and current liabilities exceeding current assets by a large margin warrant caution. The financial health score D reflects a "serious symptoms" grade, signaling urgent attention needed.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	105	Extremely low cash or short-term assets, insufficient to cover short-term obligations
Current Liabilities	1,003	Short-term debts and payables are almost 10 times current assets, indicating liquidity strain
Net Current Assets	-898	Negative working capital, signifies inability to meet short-term liabilities with current assets
Total Assets Less Current Liabilities	-898	Overall shortfall after covering current liabilities, highlighting financial weakness
Net Assets (Shareholders’ Funds)	-1,398	Negative equity, company owes more than it owns, a critical sign of insolvency risk
Director’s Advances (Loan)	-1,003	Director has loaned money to the company, indicating reliance on internal funding to sustain operations

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3. Diagnosis: Financial Condition Overview

• Liquidity Crisis (Healthy Cash Flow Absence): The company has only £105 in current assets against £1,003 in current liabilities, causing a working capital deficit of £898. This is akin to a patient with dangerously low blood pressure—there’s not enough "cash flow" to keep daily operations alive.

• Negative Net Worth (Symptoms of Financial Distress): A net liability position of £1,398 means the company’s obligations exceed its total assets. This is a serious symptom indicating potential insolvency risk if not addressed promptly.

• Dependence on Director Funding: The director has provided advances of £1,003 to the company. Reliance on such internal loans suggests external financing or revenue generation is insufficient or yet to materialize.

• Early Stage Business with Limited Financial Data: Incorporated only in June 2023, the company is in its infancy. Early losses and negative equity are not uncommon for startups but prolonged negative net assets without improvement can lead to solvency issues.

• Micro-Entity Filing and Audit Exemption: The company uses micro-entity accounting provisions, which limits detailed disclosures. While this reduces compliance cost, it also means less transparency for stakeholders.

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4. Recommendations: Path to Financial Wellness

• Improve Liquidity (Build Healthy Cash Flow): The company should focus on generating revenue or securing working capital financing (e.g., short-term credit facilities, invoice financing) to cover immediate liabilities and prevent cash shortages.

• Address Negative Equity (Strengthen Balance Sheet): Consider injecting additional equity capital or converting director loans to equity to improve net asset position. This is like administering a strong tonic to restore vitality.

• Monitor and Manage Director Advances: Formalize director loans with clear terms and repayment plans. Avoid excessive reliance on director funding as it may not be sustainable.

• Prepare Detailed Financial Planning: Develop comprehensive cash flow forecasts and budgets. Early diagnosis and monitoring of financial symptoms can prevent worsening conditions.

• Regular Financial Health Checks: Given the precarious position, conduct quarterly reviews of financial metrics to track improvement or deterioration.

• Explore Grants or Support for Startups: Investigate government or regional funding opportunities for micro businesses that can provide non-dilutive capital.

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