OZKAY LTD

Executive Summary

OZKAY LTD’s financial position has deteriorated significantly over the last year, with negative working capital and near depletion of equity. Despite an increase in cash, rising creditors and inventory levels present liquidity concerns. Due to these factors, the company currently does not demonstrate sufficient financial strength or cash flow to support new or continued credit facilities without further mitigation.

OZKAY LTD - Analysis Report

Company Number: 12705691

Analysis Date: 2025-07-20 12:51 UTC

1. Credit Opinion: DECLINE
   OZKAY LTD demonstrates significant deterioration in liquidity and net asset position as of the latest financial year ending June 2024. The company moved from a positive net current asset position (£1,305 in 2023) to a negative working capital position (-£4,756 in 2024), indicating potential difficulties to meet short-term obligations. Net assets have sharply declined from £12,590 to only £254, signaling erosion of equity and financial distress. The substantial increase in current liabilities, particularly "other creditors" rising from £8,712 to £47,274, raises concerns about short-term creditor pressure and possible overdue payments. Given these factors, the ability to service debt or sustain credit facilities is questionable without additional support or improvement in operating cash flow.

2. Financial Strength:
   The balance sheet shows a weakening financial position. Fixed assets decreased due to depreciation, and the net book value dropped from £11,285 to £5,010. The company’s shareholders’ funds have almost been fully depleted. The increase in current liabilities, especially other creditors and tax/social security costs, has outpaced growth in current assets (mainly cash and stock). This shift results in negative working capital, indicating the company’s reliance on external financing or delayed payments to suppliers to fund operations. The minimal share capital (£100) and thin equity base further reduce the buffer against financial shocks.

3. Cash Flow Assessment:
   Cash increased from £10,876 to £30,343, which is positive at face value; however, this is offset by a large increase in creditors. The rise in stock to £20,750 from £7,625 suggests some capital is tied up in inventory, potentially impacting liquidity. Debtors remain low (£1,959), which may limit near-term cash inflows. Negative net current assets imply that current liabilities exceed current assets, reflecting potential liquidity risk. The company’s cash position alone may not be sufficient to cover the large short-term obligations without additional cash inflows or refinancing.

4. Monitoring Points:

• Working capital and current ratio to track liquidity trends monthly or quarterly.
• Composition and aging of "other creditors," understanding if these are trade payables, accrued expenses, or loans.
• Cash flow from operations to assess if the company is generating sufficient cash to reduce liabilities.
• Stock turnover rate to ensure inventory is not becoming obsolete or excessive.
• Timely payment of taxation and social security to avoid penalties or enforcement actions.
• Any changes in director or ownership that might indicate restructuring or financial distress.