THE CROOKED HEART LIMITED

Executive Summary

THE CROOKED HEART LIMITED is showing clear signs of financial distress, including negative working capital and near-zero equity, which threaten its ongoing viability. While the company has some turnover, urgent steps to improve liquidity, capitalize the business, and control costs are necessary to stabilize its financial health and support future growth.

THE CROOKED HEART LIMITED - Analysis Report

Company Number: 14112400

Analysis Date: 2025-07-29 17:26 UTC

Financial Health Assessment of THE CROOKED HEART LIMITED

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1. Financial Health Score: D

Explanation:
The company shows symptoms of financial distress primarily due to persistent negative working capital, very low net assets, and a sharp decline in shareholder funds. While turnover exists, the financial structure appears fragile, indicating a need for urgent attention to liquidity and capital management.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Turnover	£50,706 (2023)	Low revenue typical of micro entity but sufficient for a small startup stage.
Fixed Assets	£4,133	Minimal investment in long-term assets; stable but slightly declining.
Current Assets	£1,827	Very low liquid assets, insufficient to cover short-term liabilities.
Current Liabilities	£4,759	High short-term obligations compared to current assets.
Net Current Assets	-£2,932	Negative working capital — a critical symptom of liquidity strain.
Total Assets less Current Liabilities	£1,201	Very low buffer after settling short-term debts.
Net Assets (Shareholder Funds)	£1	Severely depleted equity capital; borderline insolvency risk.
Accruals and Deferred Income	£1,200	Significant deferred income liabilities impacting net asset position.
Staff Numbers	1	Minimal personnel costs but limited capacity for growth or operational scaling.

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3. Diagnosis

Symptoms Analysis:

• Liquidity Concerns: The company’s net current assets are negative at -£2,932, indicating it cannot cover its short-term liabilities with current assets—a classic symptom of cash flow distress.
• Capital Erosion: Shareholders’ funds have drastically decreased from £1,943 in 2023 to just £1 in 2024, showing heavy losses or distributions that have exhausted equity capital. This is a severe warning sign, akin to a patient losing vital blood volume.
• Revenue Base: Turnover of approximately £50k suggests the company is still in early growth or development phase but struggling to translate sales into sustainable profitability.
• Stability of Assets: Fixed assets have marginally decreased, indicating no new investment or possible disposals, which could limit operational capacity.
• Deferred Income: The presence of £1,200 in accruals and deferred income liabilities suggests the company may have received payments for services not yet delivered, which could pressure future revenue recognition and cash flow.

Overall Financial Condition:
THE CROOKED HEART LIMITED is currently in a precarious financial state characterized by poor liquidity, eroded equity, and limited operational scale. Without intervention, these symptoms could worsen, leading to insolvency risk despite being an active company with ongoing filings.

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4. Recommendations

• Improve Liquidity: Increase cash reserves or current assets to cover short-term liabilities. Immediate focus on collecting receivables, managing payables, or securing short-term financing is crucial.
• Capital Injection: Consider additional equity funding or shareholder loans to restore the capital base and provide a buffer against losses.
• Cost Control: With only one employee, maintain tight control over expenses to prevent further deterioration of net assets.
• Revenue Growth: Develop strategies to increase turnover and improve gross margins to generate positive operating cash flow. Diversifying income streams or enhancing marketing could help.
• Monitor Deferred Income: Closely track deferred income obligations to ensure timely delivery of services and recognition of revenue, avoiding cash flow mismatches.
• Regular Financial Monitoring: Establish frequent financial reviews to diagnose emerging symptoms early and adjust operations accordingly.

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