GRK CARPENTRY LTD

Executive Summary

GRK Carpentry Ltd currently exhibits weak financial health with negative net assets and working capital deficits, relying heavily on director loans for funding. The company’s limited scale and cash constraints create a high credit risk profile. Without a significant turnaround in profitability or capital structure, extending credit facilities is not advisable at present.

GRK CARPENTRY LTD - Analysis Report

Company Number: 13482969

Analysis Date: 2025-07-20 18:46 UTC

1. Credit Opinion: DECLINE
   GRK Carpentry Ltd shows weak financial health with negative net assets (£-1,023) and net current liabilities of £1,023 as of 30 September 2024. The company relies heavily on a director's loan (£2,522) which may indicate insufficient external funding or capital. The negative equity position and lack of fixed assets raise concerns about the company’s ability to meet obligations without additional capital injection. Given the company’s short trading history since 2021 and limited scale (single employee), the risk of default is elevated. Credit approval is not recommended without substantial financial improvement or additional security.

2. Financial Strength:
   The balance sheet reveals very limited assets: current assets of £1,441 (mainly cash of £876 and inventories £565) versus current liabilities of £2,464. The absence of fixed assets and a negative shareholders’ funds position highlight undercapitalization. The director’s loan accounts for most liabilities, which is a related party funding source but does not strengthen external creditor confidence. The company is classified as a micro entity but is trending toward insolvency without improved profitability or capital.

3. Cash Flow Assessment:
   Cash resources are minimal (£876) and insufficient to cover current liabilities (£2,464). Negative net current assets indicate working capital deficit, limiting liquidity and operational flexibility. The company increased inventories but with poor conversion into receivables or cash. The sole director funds the company via loans, which while helpful short-term, is not a sustainable cash flow solution. Monitoring cash conversion cycles and securing additional working capital will be critical.

4. Monitoring Points:

• Liquidity ratios: current ratio and quick ratio improvements
• Director’s loan account movements and potential repayments
• Profitability trends and cash flow from operations in future accounts
• Timely filing of accounts and confirmation statements (no overdue filings currently)
• Any increase in external debt or equity funding to strengthen balance sheet