KCRP LIMITED

Executive Summary

KCRP LIMITED has transitioned from a negative equity start to a stable, solvent micro-entity with positive net assets and working capital. However, liquidity pressures and reliance on director loans indicate caution is needed to maintain financial health. Focused efforts on improving cash flow management and building reserves will enhance resilience and support future growth.

KCRP LIMITED - Analysis Report

Company Number: 13614270

Analysis Date: 2025-07-29 20:54 UTC

Financial Health Assessment for KCRP LIMITED

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1. Financial Health Score: C

Explanation:
KCRP LIMITED shows signs of modest financial health typical for a micro-entity in early stages of growth. The company maintains positive net assets and shareholders’ funds, indicating solvency. However, the liquidity position is marginal, with current liabilities slightly exceeding current assets and a decline in net current assets compared to the previous year. These factors suggest moderate financial resilience but also signals some caution is warranted.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	8,781	Cash and short-term assets are modest but stable.
Current Liabilities	8,947	Slightly higher than current assets, indicating potential short-term liquidity pressure.
Net Current Assets (Working Capital)	1,053	Positive but declined from 2,324 in 2023; working capital is a vital sign of short-term financial health.
Net Assets (Equity)	1,053	Positive net assets show solvency but growth is slow.
Shareholders’ Funds	1,053	Reflects retained earnings and capital invested; stable but low.
Directors’ Loans Outstanding	3,346	Significant loan balance from director; interest-free and repayable on demand, indicating reliance on internal financing.
Average Employees	3	Small workforce consistent with micro company status.

Interpretation:

• The company’s working capital is positive, indicating it can cover short-term obligations, but the reduction from the previous year is a symptom of tightening liquidity.
• Net assets have improved compared to earlier years, suggesting the company has moved from a negative equity position at inception to a positive one.
• The presence of a director’s loan is a common internal funding method for micro companies but represents a reliance on internal credit rather than external financing.
• The company has no overdue filings and is compliant with filing deadlines, which is a sign of good governance and regulatory health.

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3. Diagnosis

KCRP LIMITED exhibits the financial profile of a micro-entity that is in the early stages of stability after initial setup challenges (negative equity in 2021). The company now shows "healthy cash flow" indicators in terms of positive net current assets and solvency, but the narrowing working capital margin signals "symptoms of liquidity stress." This could limit the company’s ability to absorb unexpected expenses or invest in growth without additional financing.

The reliance on director advances indicates internal financial support is essential for operational continuity, which is common but signals a need to monitor cash flow carefully to avoid overdependence.

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4. Recommendations

• Improve Liquidity Management:
  Focus on accelerating receivable collections and managing payables prudently to bolster net current assets and maintain a comfortable cushion over current liabilities. This will alleviate the symptoms of short-term financial stress.

• Monitor Director Loans:
  While director loans provide flexible internal financing, formalising repayment terms or seeking alternative funding sources can reduce financial risk and improve external credibility.

• Build Reserves:
  Retaining profits or injecting additional capital can increase shareholders’ funds, improving solvency and strengthening the financial backbone for future growth.

• Regular Financial Review:
  Frequent monitoring of cash flow forecasts and working capital metrics will help detect early warning signs and allow timely corrective actions.

• Consider Growth Strategy:
  As the financial base stabilises, the company might evaluate small investments in business development to improve profitability and scale operations sustainably.

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