KRYPTON IT SERVICES LTD

Executive Summary

KRYPTON IT SERVICES LTD is currently experiencing financial strain, evidenced by a shift to negative net current assets and equity in its latest accounts. The company operates on a micro scale with minimal fixed assets but faces liquidity challenges that could impact its operational stability. Immediate focus on improving cash flow management, controlling costs, and building reserves is essential to prevent further financial deterioration and support sustainable growth.

KRYPTON IT SERVICES LTD - Analysis Report

Company Number: 13620145

Analysis Date: 2025-07-29 15:54 UTC

Financial Health Assessment for KRYPTON IT SERVICES LTD

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1. Financial Health Score: D (Below Healthy)

Explanation:
KRYPTON IT SERVICES LTD shows signs of financial strain as its net current assets have turned negative in the latest year, resulting in negative net assets and shareholders’ funds. While the business is still active and compliant with filing deadlines, its balance sheet reveals symptoms of financial distress that require prompt attention to avoid further deterioration.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	0	0	No long-term investments; potentially low capital intensity.
Current Assets	25,465	23,106	Slight increase, positive sign of liquid resources.
Current Liabilities	25,792	22,993	Liabilities have grown, slightly outpacing assets.
Net Current Assets (Working Capital)	-327	113	Shift from marginally positive to negative, warning sign.
Net Assets (Equity)	-327	113	Negative equity indicates financial weakness.
Average Number of Employees	1	1	Very small scale operation (micro entity).

• Working Capital: The negative net current assets ("working capital") in 2024 means the company may lack sufficient short-term resources to cover immediate debts, a red flag often described as "poor liquidity" or "tight cash flow."
• Equity Deficit: Negative shareholders' funds indicate the company’s liabilities exceed its assets, which is akin to a patient whose vital signs are unstable — it may still be functioning but is under stress.
• Size and Scale: As a micro entity with only 1 employee and no fixed assets, the company operates a lean model, which can be positive if cash flow is managed carefully, but also means there is little buffer for financial shocks.

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3. Diagnosis: Underlying Financial Health

• Symptoms of Distress:
  The transition from a small positive net asset position in 2023 to a negative one in 2024 suggests the company is experiencing financial strain. The increase in current liabilities relative to current assets implies possible cash flow management issues or increased short-term debts. This condition, if left untreated, can worsen and potentially lead to insolvency risks.

• Stable Operation but Fragile Balance Sheet:
  The company continues to file accounts on time and remains active, which indicates operational continuity. However, the balance sheet's negative equity “symptom” suggests the company may be relying on creditor financing or delaying payments, which can be risky.

• Micro Entity Status:
  The small scale and minimal filing requirements mean less complexity, but also fewer resources to absorb financial shocks. The lack of fixed assets indicates no long-term investments; this can be neutral or negative depending on the business model—here it suggests a service-based IT consultancy/digital marketing agency with minimal capital expenditure.

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4. Recommendations: Prescriptions for Financial Wellness

1. Improve Working Capital Management:

   • Accelerate collection of receivables and review payment terms with suppliers to better match cash inflows and outflows.
   • Consider short-term financing options, such as a business overdraft or invoice factoring, to ease liquidity pressure.

2. Cost Control and Profitability Focus:

   • Review expenses carefully to ensure that costs do not outpace income, especially given the company’s small scale.
   • Explore opportunities to increase sales or diversify revenue streams within the IT services sector.

3. Build a Cash Reserve:

   • Aim to generate a positive cash flow surplus to rebuild equity and buffer against future uncertainties.
   • Even modest retained profits can improve net assets and reduce financial stress symptoms.

4. Financial Monitoring and Reporting:

   • Implement regular financial health checks (monthly cash flow forecasts, monthly balance sheet reviews).
   • Engage with an accountant or financial advisor to set up early warning indicators for cash flow issues.

5. Strategic Review:

   • Evaluate the business model and growth plans to ensure alignment with financial capacity.
   • Consider potential for investment in fixed assets or technology that may improve operational efficiency and profitability.

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Medical Analogy:
KRYPTON IT SERVICES LTD currently exhibits "symptoms" of financial distress akin to a patient with low blood pressure—still functioning but at risk of collapse without intervention. The negative working capital is a warning sign, like a lab result indicating dehydration or electrolyte imbalance. Prompt action to stabilize cash flow and strengthen the balance sheet is critical to restore health and vitality.

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