KOOL-KOOL CUSTOM DESIGN LTD

Executive Summary

KOOL-KOOL CUSTOM DESIGN LTD is currently in a financially distressed state with persistent negative working capital and net assets over the past three years, indicating liquidity and solvency challenges. While still active, the company requires urgent financial intervention, including capital injection and improved cash flow management, to restore health and ensure sustainable operations.

KOOL-KOOL CUSTOM DESIGN LTD - Analysis Report

Company Number: 13593117

Analysis Date: 2025-07-20 14:18 UTC

Financial Health Assessment: KOOL-KOOL CUSTOM DESIGN LTD (Year Ended 31 August 2024)

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1. Financial Health Score: D

Explanation:
The company exhibits persistent negative net assets and working capital over the last three years, reflecting a condition akin to chronic financial "illness." While still operational, KOOL-KOOL CUSTOM DESIGN LTD shows symptoms of financial distress, signaling urgent need for intervention to avoid further deterioration.

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2. Key Vital Signs (Critical Metrics & Interpretation)

Vital Sign	2024 Value (£)	2023 Value (£)	Trend	Interpretation
Current Assets	2,100	2,229	Slight decline	Limited liquidity; "healthy cash reserves" are very low
Current Liabilities	6,193	6,033	Increasing	Short-term obligations exceeding assets; "breathing difficulty" in meeting debts
Net Current Assets (Working Capital)	-4,093	-3,804	Worsening negative	Negative working capital signals cash flow "blockage" and potential insolvency risk
Net Assets (Equity)	-4,093	-3,804	Deteriorating	Company’s liabilities exceed assets; "balance sheet anemia"
Shareholders’ Funds	-4,093	-3,804	Negative & worsening	Negative equity indicates financial distress

Additional Observations:

• No employees, suggesting very limited operational scale or reliance on contractors.
• No audit required due to micro-entity status but limits depth of external assurance.
• Company operates in a competitive retail sector (mail order/internet sales), which often requires strong cash flow to manage inventory and customer fulfillment.

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3. Diagnosis: Financial Condition Assessment

KOOL-KOOL CUSTOM DESIGN LTD is currently in a precarious financial state characterized by:

• Chronic Negative Working Capital: The company consistently holds fewer current assets than current liabilities, which is a classic symptom of liquidity distress. This could mean difficulty in paying suppliers, creditors, or other short-term obligations on time.
• Negative Net Assets: The company’s liabilities outweigh its total assets, indicating the business is "underwater" financially. This is a key indicator of insolvency risk if sustained.
• Flat to Declining Asset Base: Current assets are not growing and remain at very low levels, limiting the company's ability to generate cash quickly.
• No Employees and Micro Category: The business appears very small scale, possibly a sole proprietor or single director operation, which might limit complexity but also limits financial resilience.
• No Audit and Limited Disclosure: While acceptable for micro-entities, it means financial transparency is limited, and potential risks may be underreported.

Underlying Causes (Suspected):

• The business may be undercapitalized with insufficient funding to meet ongoing expenses.
• Potential cash flow issues from delayed customer payments or high short-term liabilities.
• The retail model may be facing competitive pressures or operational inefficiencies.

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4. Prognosis: Future Financial Outlook

Without corrective measures, the company faces a risk of insolvency or forced restructuring:

• Continued negative working capital will strain operations and creditor relationships.
• Negative equity may deter new investment or borrowing, further limiting financial flexibility.
• However, the company remains active and not in liquidation, providing a window for financial rehabilitation.

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5. Recommendations: Actions to Improve Financial Wellness

1. Improve Liquidity Management:

   • Accelerate receivables collection or negotiate better payment terms with suppliers.
   • Avoid unnecessary expenses and optimize inventory levels if applicable.

2. Capital Injection:

   • Seek additional equity funding or shareholder loans to restore positive net assets.
   • Explore grants or government support schemes for small businesses.

3. Cost Control and Business Model Review:

   • Analyze operating costs and reduce overheads where possible.
   • Evaluate pricing strategy and sales channels to improve margins.

4. Financial Monitoring:

   • Implement regular cash flow forecasting to anticipate liquidity shortfalls.
   • Engage a financial advisor or accountant to provide ongoing health checks.

5. Stakeholder Communication:

   • Maintain transparent communication with creditors and suppliers to negotiate terms and avoid disruption.

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Medical Analogy Summary:
KOOL-KOOL CUSTOM DESIGN LTD is showing "symptoms of financial distress" such as poor liquidity ("restricted blood flow") and negative equity ("organ failure"). Immediate "treatment" through capital support and cash flow management is critical to revive the company’s financial health and prevent a "collapse."

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