OK4U2 LIMITED

Executive Summary

OK4U2 LIMITED shows early signs of financial distress with a shift from positive to negative net assets and working capital within one year. The company’s liquidity and capital base have weakened, posing risks to its operational sustainability. Immediate focus on cash flow management, cost control, and potential capital support is essential to improve financial health and avoid insolvency risks.

OK4U2 LIMITED - Analysis Report

Company Number: 14518525

Analysis Date: 2025-07-20 17:09 UTC

Financial Health Assessment Report for OK4U2 LIMITED

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1. Financial Health Score: D

Explanation:
The company has shown a sharp deterioration in net asset value and working capital over the last financial year, moving from a positive net asset position of £405 at the end of 2023 to a negative net asset and working capital position of -£196 and -£232 respectively in 2024. This signals financial distress symptoms akin to a patient whose vital signs have worsened quickly. The micro-entity scale limits the depth of financial detail, but the negative net assets and current liabilities exceeding current assets point to a fragile and vulnerable financial condition.

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2. Key Vital Signs

Metric	2023 (£)	2024 (£)	Interpretation
Fixed Assets	1,205	36	Significant drop in fixed assets suggests asset disposals or write-offs.
Current Assets	1,205	Not separately disclosed in 2024	Available data shows a decrease or reclassification.
Current Liabilities	800	232	Decrease in short-term debts is positive but may reflect payment delays or restructuring.
Net Current Assets	405	-232	Turnover from positive to negative working capital indicates liquidity stress.
Net Assets (Shareholders' Funds)	405	-196	Negative net assets indicate insolvency risk – liabilities exceed assets.

Additional Notes:

• The company operates in residential nursing care facilities, a sector requiring stable and ongoing cash flows to cover operational costs and regulatory compliance.
• The sole director and controlling shareholder is Mr. Chimaobi Vincent Okereke.
• No audit was required or performed, typical for micro-entities but limiting external assurance.
• The company has only one employee, implying a lean operational structure.

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3. Diagnosis

The financial "symptoms" exhibited by OK4U2 LIMITED resemble acute financial distress:

• Liquidity Crunch: The shift from positive to negative net current assets signals that the company’s short-term liabilities now exceed its liquid assets, a "symptom" akin to a patient experiencing poor circulation. This raises concerns about the company's ability to meet immediate obligations.

• Capital Erosion: Negative net assets suggest the company’s financial "immune system" is weakened; liabilities outstrip assets, potentially impairing its capacity to raise funds or secure credit.

• Asset Base Shrinkage: The drastic reduction in fixed assets may indicate asset sales or depreciation that is not matched by reinvestment, possibly reflecting operational downsizing or cash raising efforts.

• Early Stage Risk: Incorporated in December 2022, the company is still in its infancy. Young companies often face higher volatility and cash flow pressures, but the quick decline in financial health is concerning.

Given these factors, without intervention, the company may face insolvency risks or difficulty sustaining operations.

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4. Recommendations

To restore the company’s financial health and improve its prognosis, the following actions are recommended:

• Improve Cash Flow Management:
  Prioritize collecting receivables promptly and managing payables to maintain a positive working capital buffer. Consider short-term financing options to ease liquidity pressure if necessary.

• Cost Control and Operational Efficiency:
  Review all operational expenses to identify non-essential costs. As a micro entity with only one employee, operational efficiency is critical to survival.

• Asset Utilization Review:
  Analyze the fixed assets reduction to ensure disposals or depreciation align with operational needs. If assets were sold to cover cash shortfalls, plan for strategic reinvestment when feasible.

• Engage a Financial Advisor:
  Seek expert advice to explore restructuring options, including potential capital injections from shareholders or external investors, to restore net asset strength.

• Strengthen Governance and Reporting:
  Though audit exemption applies, consider improved internal controls and financial reporting to detect issues early and reassure stakeholders.

• Contingency Planning:
  Prepare for worst-case scenarios by exploring rescue options such as formal restructuring or administration to protect business continuity.

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