Company Number: 13458636

Analysis Date: 2025-07-20 11:24 UTC

1. Credit Opinion: DECLINE
   KNMS Embroidery Ltd shows persistent net liabilities and negative shareholders' funds over the last three financial years, indicating ongoing losses and insufficient equity. The company’s current liabilities consistently exceed current assets, resulting in negative working capital and net current liabilities of £4,285 as of June 2024. This weak liquidity position undermines the company’s ability to meet short-term obligations and service new credit. Despite a slight improvement from the prior year, the financial health remains fragile, with no evidence of profitability or positive net asset growth. Given these factors and the micro-company scale, the risk of default on credit facilities is elevated.

2. Financial Strength:
   The balance sheet reflects a deteriorated financial position since incorporation in 2021. Net assets have declined from a modest positive £459 to a negative £4,595 in 2024. Total liabilities, including creditors due within one year (£8,589) and some long-term creditors (£310), substantially exceed assets. The company carries no significant fixed assets, relying solely on current assets of £4,304 at year-end. This capital structure and lack of equity buffer indicate poor financial strength and limited capacity to absorb shocks or invest in growth.

3. Cash Flow Assessment:
   The company’s negative net current assets imply ongoing liquidity strain. Current liabilities exceed current assets by £4,285, signaling potential difficulties in funding day-to-day operations without external support. With an average of only 3 employees, operating scale is very small, likely limiting cash inflows. No cash flow statements are provided, but the balance sheet suggests working capital is a key weakness. The absence of positive retained earnings or reserves further indicates limited internal cash generation and reliance on shareholder or creditor funding.

4. Monitoring Points:

• Monitor quarterly cash flow and working capital trends to detect worsening liquidity.
• Watch for any late payments or defaults on trade or financial creditors.
• Track changes in net liabilities and equity position in future filings.
• Review management actions to improve profitability and cash generation.
• Observe any new borrowing or capital injections that might strengthen the balance sheet.
• Consider director and shareholder commitment to supporting the business financially.