KROME KEYCAPS LTD

Executive Summary

Krome Keycaps LTD demonstrates a healthy and improving financial position with strong working capital and growing equity, reflecting operational success and good management. The introduction of long-term debt and increased inventory levels are areas to monitor closely to sustain financial wellness. With disciplined cash flow and inventory management, the company is well-positioned for continued growth.

KROME KEYCAPS LTD - Analysis Report

Company Number: 13645668

Analysis Date: 2025-07-20 13:42 UTC

Financial Health Assessment of KROME KEYCAPS LTD

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1. Financial Health Score: B

Explanation:
Krome Keycaps LTD shows solid financial footing with positive net assets, growing shareholders’ funds, and healthy working capital. The company is young (incorporated 2021), and the upward trend in net assets and net current assets suggests good financial management and operational growth. However, the presence of bank loans and a directors’ loan account liability warrants monitoring liquidity and debt servicing capability. Overall, it reflects a financially stable small business with moderate risks but good prospects for future growth.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	1,013	1,350	Small investment in tangible assets, stable.
Current Assets	36,579	32,024	Increased short-term resources, positive sign.
Cash at Bank	8,874	7,308	Healthy cash reserves with growth, good liquidity.
Debtors (Receivables)	1,705	4,716	Decline in receivables, reducing credit risk.
Stocks (Inventories)	26,000	20,000	Increased stock, possibly gearing for higher sales.
Current Liabilities	11,486	16,906	Reduced short-term debts, improved liquidity.
Net Current Assets (Working Capital)	25,093	15,118	Strong positive working capital, "healthy cash flow".
Long-Term Liabilities	6,667	0	New bank loan introduced; watch debt servicing.
Net Assets (Equity)	19,439	16,468	Growing equity base, indicates retained profits.
Share Capital	2	2	Minimal share capital, typical for small private company.

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3. Diagnosis: Financial Health and Symptoms Analysis

• Healthy Cash Flow Position:
  The company has a strong positive net current asset position (£25k in 2024 vs. £15k in 2023), reflecting good short-term liquidity and the ability to cover current liabilities comfortably. This is a key "vital sign" indicating operational health.

• Asset Management:
  Tangible fixed assets are minimal and stable, which aligns with the business nature (wholesale of computer peripherals and software). The significant increase in stock (from £20k to £26k) suggests the company is preparing inventory for increased sales or demand. This can be positive if managed well but also requires monitoring to avoid overstocking.

• Receivables Trend:
  Debtors decreased substantially, which reduces credit risk and improves cash flow. This points to effective credit control or faster customer payments.

• Debt and Liabilities:
  The reduction in current liabilities from £16.9k to £11.5k is encouraging, but the introduction of long-term bank loans (£6.7k) represents new financial obligations that will require regular servicing. Additionally, the directors’ loan account liability decreased significantly, which suggests repayment or restructuring of internal financing.

• Equity and Profit Retention:
  Net assets increased by nearly £3k, driven by retained earnings, indicating profitability or at least positive net income during the year. This builds a buffer against future risks.

• Business Age and Size:
  As a relatively new business incorporated in 2021 and classified as a small company (turnover and asset size under small company thresholds), Krome Keycaps is still in the growth phase with manageable risks.

• No Overdue Filings or Compliance Issues:
  The company has filed accounts and confirmation statements on time, showing good governance and compliance, which supports financial stability.

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4. Prognosis: Future Financial Outlook

• Positive Growth Trajectory:
  Continued increase in equity and working capital suggests the company is on a growth path with improving financial health.

• Debt Management Watch:
  The new long-term bank loan requires careful cash flow management to ensure timely repayments without straining liquidity.

• Inventory Management:
  The increased stock levels should be monitored closely to avoid tying up excessive capital in inventory that might become obsolete or slow-moving.

• Cash Flow Maintenance:
  Maintaining or growing cash reserves will be critical to handle operational expenses and debt servicing.

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5. Recommendations

1. Monitor Debt Servicing:
   Implement a rolling cash flow forecast to ensure the company can meet bank loan repayments and avoid liquidity stress.

2. Inventory Controls:
   Establish robust inventory management and sales forecasting to balance stock levels with demand, preventing capital lock-up.

3. Strengthen Credit Control:
   Continue aggressive management of receivables to maintain low debtor days and reduce credit risk.

4. Build Capital Reserves:
   Consider strategies to boost retained earnings or equity, such as reinvesting profits or attracting new capital to strengthen the balance sheet.

5. Regular Financial Reviews:
   Conduct periodic financial health checks to catch any early signs of distress and adjust business plans accordingly.

6. Explore Growth Opportunities:
   Utilize good liquidity and working capital positions to invest in marketing or product development to expand market share.

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