KNOB AND KEYS LTD

Executive Summary

KNOB AND KEYS LTD has improved its liquidity position significantly, demonstrating healthy cash flow and working capital. However, it suffers from negative net assets due to substantial long-term liabilities, indicating financial strain. Focused efforts on debt restructuring, profitability, and capital strengthening are essential to restore its financial wellbeing.

KNOB AND KEYS LTD - Analysis Report

Company Number: 14071028

Analysis Date: 2025-07-29 15:41 UTC

Financial Health Assessment for KNOB AND KEYS LTD as of 30 April 2024

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1. Financial Health Score: C (Fair)

Explanation:
The company shows some positive signs such as improving net current assets and increased cash reserves, indicating a healthier short-term liquidity position compared to the previous year. However, the overall net assets and shareholders’ funds remain negative, reflecting a balance sheet weakness and accumulated losses ("symptoms of distress"). The company’s heavy long-term liabilities outweigh its total assets, signalling financial strain. While not in immediate danger, the company requires careful management to restore financial vitality.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£212,455	Significant investment in tangible assets, mainly land and buildings.
Current Assets	£111,408	Healthy increase (notably cash), improving liquidity.
Cash at Bank	£109,648	Strong cash position, a positive sign of "healthy cash flow".
Debtors	£1,760	Low receivables, indicating efficient collections or low credit sales.
Current Liabilities	£27,783	Short-term debts are modest compared to cash and current assets—good short-term solvency.
Net Current Assets	+£83,625	Positive working capital, a "healthy pulse" indicating the company can cover short-term debts.
Long-term Liabilities	£321,473	Substantial long-term debts, a "chronic condition" impacting net asset value.
Net Assets	-£25,393	Negative equity signals accumulated losses and financial strain ("symptom of financial fatigue").
Shareholders' Funds	-£25,393	Mirrors net assets; indicates capital deficiency.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Improvement: The dramatic increase in cash from £11,138 to £109,648 and positive net current assets (+£83,625) show the company has improved its short-term liquidity ("healthy blood flow"). This means it is better positioned to meet immediate obligations without distress.

• Balance Sheet Stress: Despite improved liquidity, the company’s balance sheet shows a negative net asset position (-£25,393). This "underlying symptom" indicates the company has accumulated losses and/or liabilities exceeding assets, mainly due to large long-term borrowings (£321,473).

• Asset Reduction: The company sold part of its fixed assets (land/buildings) reducing them by £111,529 in the year, which may have contributed to the improved cash position but also reduced total asset base.

• Small Scale Operation: With only 1 employee and a single director controlling 100% voting rights, the company is small and tightly controlled. This may limit operational complexity but also concentrates risk.

• Industry Context: Operating in real estate management and ownership (SIC codes 68100, 68209, 68320), investments are capital intensive. The negative net assets and reliance on debt are typical risks in this sector but require prudent management.

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4. Recommendations: Steps to Improve Financial Wellness

• Debt Restructuring: Explore opportunities to refinance or restructure long-term liabilities to reduce interest burden and extend repayment terms. This will alleviate the chronic strain on net assets.

• Profitability Focus: Improve operational profitability to generate positive retained earnings, which will rebuild shareholders' funds and reverse the negative equity "ailment."

• Asset Management: Assess the fixed asset portfolio regularly to ensure assets are productive and consider further disposals if non-core or underperforming assets can release cash.

• Cash Flow Monitoring: Maintain the strong cash position and continue to monitor working capital closely to avoid liquidity shocks.

• Capital Injection: Consider additional equity investment or shareholder loans to strengthen the capital base and improve solvency ratios.

• Governance and Controls: As a small company, ensure strong financial controls and governance to detect early signs of distress and make informed decisions.

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Medical Analogy Summary

KNOB AND KEYS LTD shows signs of a recovering patient with a strong pulse (cash and short-term liquidity) but suffers from chronic underlying conditions (negative net assets due to high debt). With proper treatment—debt management, profitability improvement, and capital strengthening—the company can regain full financial health.

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