KROSCHKE UK LTD

Executive Summary

KROSCHKE UK LTD is exhibiting signs of financial distress with negative working capital and shareholders' funds as of the latest financial year. Immediate focus on liquidity improvement, cost control, and potential capital injection is essential to stabilize the company’s financial health. Without intervention, the risk of insolvency may increase, but with prudent management and strategic adjustments, recovery is achievable.

KROSCHKE UK LTD - Analysis Report

Company Number: 14374020

Analysis Date: 2025-07-20 12:40 UTC

Financial Health Assessment for KROSCHKE UK LTD
(Financial Year Ended 30 September 2024)

---

1. Financial Health Score: D

Explanation:
KROSCHKE UK LTD shows clear symptoms of financial distress, particularly in liquidity and net asset position. The significant negative net current assets and shareholders' funds indicate the company is currently operating with a deficit, which lowers its financial health grade. While still active and not in formal insolvency, the company’s balance sheet reveals warning signs that need urgent attention.

---

2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	5,143	6,280	Decreased cash/resources available to meet short-term obligations.
Current Liabilities	19,238	10,050	Increased short-term debts, a red flag for liquidity.
Net Current Assets	-14,095	-3,770	Negative working capital, indicating inability to cover short-term liabilities with current assets.
Total Assets less CL	-4,095	6,230	Shift from positive to negative, indicating erosion of net asset value.
Shareholders’ Funds (Equity)	-4,095	6,230	Negative equity means liabilities exceed assets; a sign of financial strain.
Employees	0	0	No employees, possibly limiting operational capacity but reducing payroll burden.

Interpretation of Vital Signs:

• Liquidity (Healthy cash flow): The company’s liquidity is weak; current liabilities almost quadrupled, while current assets declined, creating negative working capital—a classic symptom of cash flow distress.
• Solvency (Balance sheet robustness): The net asset position has deteriorated from positive to negative within a year, signaling solvency concerns. Negative shareholders’ funds equate to a balance sheet "illness" where debts outweigh resources.
• Operational scale: No employees and a micro-entity filing status imply a very small or possibly nascent operation, which may impact revenue generation and resilience.

---

3. Diagnosis

KROSCHKE UK LTD is currently in a fragile financial state. The company shows symptoms of distress primarily due to liquidity shortages and a negative equity position. The deterioration from a positive net asset and equity position in 2023 to negative in 2024 suggests recent adverse events or operational losses impacting financial health.

The increase in current liabilities, coupled with declining current assets, points to potential difficulties in meeting short-term obligations, a critical concern akin to a patient showing signs of circulatory insufficiency. Without corrective action, this may lead to more severe financial complications, such as insolvency.

The lack of employees indicates the company may be reliant on directors or external contractors, reducing fixed overheads but possibly limiting growth and operational capacity.

---

4. Recommendations

Immediate Actions:

• Improve Liquidity:
  • Engage with creditors to negotiate extended payment terms or restructuring of short-term liabilities to ease cash flow pressure.
  • Review and accelerate collection of any receivables or assets that can be liquidated.
• Capital Injection:
  • Consider new equity financing from existing shareholders or external investors to restore positive net asset levels and improve solvency.
• Cost Management:
  • Rigorously control expenses and avoid unnecessary outflows to stabilize the cash position.

Medium to Long-Term Actions:

• Business Model Review:
  • Analyze operational activities and revenue streams to identify causes of negative results and develop a sustainable profit plan.
• Financial Monitoring:
  • Implement robust cash flow forecasting and financial controls to detect early symptoms of distress and act proactively.
• Strategic Planning:
  • Explore partnerships or diversification within the IT consultancy and software development space to enhance income stability.

Governance and Reporting:

• Ensure timely and accurate filing of accounts and returns to maintain regulatory compliance and stakeholder confidence.
• Consider seeking professional advice for turnaround strategies if financial distress continues.

---