NOUGHTS AND CROQUETTES LTD

Executive Summary

NOUGHTS AND CROQUETTES LTD shows significant financial distress, highlighted by negative working capital and net assets, which impairs its ability to meet short-term obligations. Immediate actions to improve liquidity, strengthen equity, and manage cash flow are critical to stabilize the business and avoid insolvency risks. With focused financial management and possible capital support, the company can work towards restoring financial health.

NOUGHTS AND CROQUETTES LTD - Analysis Report

Company Number: 12612549

Analysis Date: 2025-07-29 14:33 UTC

Financial Health Assessment Report for NOUGHTS AND CROQUETTES LTD

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1. Financial Health Score: D

Explanation:
The company exhibits several concerning signs that detract from its financial stability. While it has grown total assets and shareholder funds over the years, the current liabilities significantly exceed current assets, resulting in negative net current assets and net liabilities. This reflects symptoms of financial distress, akin to a patient with dangerously low vital signs. The negative working capital is a critical symptom that suggests liquidity challenges. The absence of employees and minimal share capital further underline a fragile operational base. Overall, the score reflects a company struggling to maintain healthy cash flow and balance sheet resilience.

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2. Key Vital Signs (Core Financial Metrics) & Interpretation

Metric	2024 Value (£)	Interpretation
Fixed Assets	39,043	Moderate investment in long-term assets, stable but not growing.
Current Assets	87,169	Liquid assets available, but insufficient relative to liabilities.
Current Liabilities	323,648	Very high short-term obligations, a red flag.
Net Current Assets (Working Capital)	-236,479	Negative working capital—symptom of liquidity strain.
Total Assets Less Current Liabilities	-197,436	Negative net assets indicating liabilities exceed assets.
Shareholders’ Funds (Equity)	-197,436	Negative equity, indicating erosion of shareholder value.
Employees	0	No staff employed—raises operational sustainability concerns.
Share Capital	£0.01	Minimal equity investment—very thin capital base.

Explanation of Vital Signs:

• Negative working capital means the company may struggle to meet short-term debts, akin to a patient with insufficient blood flow to critical organs.
• Negative net assets indicate the business owes more than it owns—this is a symptom of financial distress that can lead to insolvency if unresolved.
• The lack of employees may mean reliance on outsourcing or that the company is at an early or dormant operational stage, potentially limiting growth.
• The minimal share capital suggests limited initial funding and possibly constrained ability to absorb losses.

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3. Diagnosis: What the Financial Data Reveals

• The company’s liquidity position is weak, with current liabilities nearly four times the current assets. This imbalance signals acute financial stress, making it difficult to cover short-term obligations without additional financing or asset sales.

• The negative net assets and shareholders’ funds indicate the business is technically insolvent on a balance sheet basis. This is a critical warning sign, comparable to a patient with vital organ failure needing urgent intervention.

• The fixed assets have slightly decreased from £43,790 in 2023 to £39,043 in 2024, possibly due to depreciation or asset disposals, which may reflect cost-cutting or asset management efforts.

• The company has no employees, which could imply a very lean operation or outsourcing model but raises questions about capacity for operational growth and risk of over-dependence on the director or contractors.

• The director, Mr. Oliver Edward Knell, owns 75-100% and controls the company, which centralizes decision-making but could limit external oversight.

• The company operates in wholesale and manufacture of food products, a competitive sector where financial resilience is essential due to variable input costs and demand fluctuations.

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4. Recommendations: Actions to Improve Financial Wellness

• Address liquidity urgently: Explore options to reduce current liabilities or increase current assets. This could include negotiating extended payment terms with suppliers, accelerating receivables collection, or securing short-term financing.

• Increase equity funding: Consider capital injection from the owner or new investors to restore positive net assets and strengthen the balance sheet, analogous to providing a transfusion to stabilize the patient.

• Improve cash flow management: Implement rigorous cash flow forecasting and control costs to ensure operating cash inflows exceed outflows. Healthy cash flow is essential to sustain operations and service debts.

• Assess operational model: With zero employees, evaluate if hiring or strategic partnerships could improve capacity and operational stability. Reliance solely on the director or contractors can be risky.

• Regular financial monitoring: Establish monthly financial reviews focusing on liquidity, working capital, and profitability to detect early symptoms of distress and enable timely interventions.

• Explore restructuring or refinancing options: If liabilities are unsustainable, consider restructuring debts or refinancing to spread out payments and reduce immediate pressure.

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