KAROMIE LTD
Executive Summary
KAROMIE LTD is a micro-entity currently facing liquidity challenges and negative equity, indicating early financial distress. Immediate action to improve cash flow and capital structure is recommended to restore financial health and ensure sustainable operations. With focused management and potential capital infusion, the company can stabilize and improve its financial outlook.
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This analysis is opinion only and should not be interpreted as financial advice.
KAROMIE LTD - Analysis Report
Financial Health Assessment: KAROMIE LTD (as at 28 February 2024)
1. Financial Health Score: D
Explanation:
KAROMIE LTD currently exhibits signs of financial distress, primarily indicated by significant net current liabilities and negative shareholders' funds. The lack of employees and micro-entity status suggest it is an early-stage or very small business, but the current financial indicators show a precarious liquidity position and negative net worth, which require urgent attention.
2. Key Vital Signs
Metric | Value (£) | Interpretation |
---|---|---|
Current Assets | 4,279 | Cash or short-term assets available to cover immediate debts. |
Current Liabilities | 22,052 | Debts and obligations due within one year. |
Net Current Assets (Working Capital) | -17,673 | Negative value indicates inability to cover short-term debts. |
Total Assets less Current Liabilities | -17,673 | Reflects overall net asset position; negative means liabilities exceed assets. |
Shareholders Funds (Equity) | -17,673 | Negative equity implies accumulated losses or under-capitalisation. |
Employees | 0 | No staff employed; limited operational scale or activity. |
Interpretation:
- Negative working capital ("symptom of distress") signals a cash flow crunch and potential difficulty settling short-term obligations when due.
- Negative shareholders’ funds ("diagnostic of insolvency risk") means the company’s liabilities exceed its assets, which can be a red flag for creditors and investors.
- The company is a micro-entity, indicating it is either newly formed or very small scale, which often entails higher risk but also potential for growth if managed well.
- No employees suggest limited operational activity or a reliance on the director and possibly outsourcing.
3. Diagnosis
KAROMIE LTD is in a fragile financial state at this early stage. The company shows symptoms of financial strain, primarily poor liquidity and negative net assets. This could be due to initial start-up costs, funding shortfalls, or delayed revenue generation. The director’s 100% control points to a closely held firm, often typical for small start-ups.
The absence of an audit and micro-entity filing exemptions are consistent with company size but also mean less financial transparency for external stakeholders. Without intervention, the risk of insolvency or inability to meet creditor demands could increase.
4. Recommendations
- Improve Liquidity: Explore ways to increase current assets, such as capital injection from the shareholder(s), short-term financing, or accelerating receivables collection if applicable.
- Cost Control: Review and reduce overheads and non-essential expenses to conserve cash. Since no employees are currently employed, focus on managing other payable obligations prudently.
- Capital Structure: Consider additional equity funding to restore positive shareholders’ funds and provide a buffer against liabilities. This may involve the director injecting more capital or seeking external investors.
- Revenue Generation: Prioritize strategies to boost sales and cash inflows to build a healthy "cash flow pulse." Early-stage businesses often face this hurdle; focus on securing contracts or clients aligned with the SIC code (professional, scientific, technical activities).
- Financial Monitoring: Implement regular cash flow forecasting and financial reviews to detect early warning signs and adjust plans accordingly.
- Professional Advice: Engage with financial and legal advisors to explore restructuring options or support in case of creditor pressure.
Medical Analogy Summary
KAROMIE LTD currently exhibits symptoms of financial distress, akin to a patient with low blood pressure and weak pulse — the vital signs indicate poor liquidity and negative net worth, suggesting the company’s financial "heart" is struggling to pump effectively. Immediate interventions to strengthen cash flow and capital (akin to administering fluids and nutrients) are essential to stabilize its condition and improve prognosis.
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