THE PROP LIBRARY LTD

Executive Summary

THE PROP LIBRARY LTD is currently in a financially distressed state characterized by negative equity and working capital deficits, signaling liquidity challenges. Immediate measures such as capital injection, cost management, and creditor negotiation are essential to restore financial health and ensure business continuity. Without intervention, the risk of insolvency is heightened.

THE PROP LIBRARY LTD - Analysis Report

Company Number: 13743216

Analysis Date: 2025-07-20 19:21 UTC

Financial Health Score: D

Explanation: The company exhibits symptoms of financial distress, primarily evident through persistent negative shareholders' funds (equity) and a working capital deficit. These "vital signs" indicate a weak financial position that requires urgent attention to restore health.

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Key Vital Signs

1. Shareholders’ Funds (Equity):

   • 2023: £-9,297 (negative)
   • 2022: £-1,330 (negative)
     Negative equity is a significant symptom indicating the company’s liabilities exceed its assets. This "under the skin" sign suggests accumulated losses or inadequate capital injection, undermining financial stability.

2. Working Capital (Net Current Assets):

   • 2023: Current Assets £4,241 - Current Liabilities £15,472 = £-11,231 (negative)
   • 2022: £3,487 - £8,685 = £-5,198 (negative)
     A negative working capital signals a liquidity problem — the company may struggle to meet short-term obligations as they fall due. This is akin to a patient showing signs of dehydration, requiring immediate fluid (cash) replenishment.

3. Fixed Assets:

   • Declined from £3,868 in 2022 to £1,934 in 2023
     This reduction could indicate asset disposals or depreciation outpacing investment, reflecting potential difficulties in maintaining operational capacity.

4. Profit and Loss / Income Data:

   • Not provided in detail, but persistent negative equity implies ongoing losses or insufficient profitability.

5. Company Size and Activity:

   • Micro entity, no employees, recently incorporated (Nov 2021)
   • Engaged in niche markets: vintage prop hire and online retail (SIC codes 77390, 47910)
     Early-stage companies often face startup losses, which could explain some negative equity, but the trend is concerning.

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Diagnosis

The financial "symptoms" clearly indicate THE PROP LIBRARY LTD is in a fragile state. The negative shareholders’ funds and working capital shortfall mean the company is effectively insolvent on a balance sheet basis. Without sufficient liquid assets to cover short-term liabilities, there is a risk of cash flow distress or inability to pay creditors on time.

The dip in fixed assets and lack of employees suggest limited operational scale, consistent with micro-entity status. However, the worsening financial position over the last year signals the business model or capital structure may be under strain.

This condition resembles a patient with chronic illness where early intervention is critical. If left unaddressed, the company could face formal insolvency procedures or forced restructuring.

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Prognosis

Given the current financial indicators, the prognosis is guarded but not hopeless. The company is still operational and not in liquidation or administration. However, to avoid worsening symptoms and potential "organ failure" (insolvency), decisive corrective actions are needed.

If the company can secure additional capital, improve profitability, or restructure liabilities to restore positive equity and working capital, the outlook can improve. Conversely, continued losses and negative cash flows will likely lead to financial collapse.

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Recommendations

1. Capital Injection:
   Consider additional funding from the shareholder or external investors to strengthen equity and improve liquidity. This acts like an "intravenous drip" to stabilize vital functions.

2. Cost Control and Revenue Growth:
   Analyze cost structure and pricing strategy to improve margins. Explore marketing and sales initiatives to increase turnover, leveraging the unique vintage prop niche.

3. Creditor Negotiation:
   Engage with creditors to potentially extend payment terms or negotiate settlements to ease immediate cash flow pressures.

4. Financial Monitoring:
   Implement rigorous cash flow forecasting and management systems to detect early warning signs and avoid sudden liquidity crises.

5. Explore Grants or Support:
   As a micro-entity in a creative sector, investigate eligibility for government grants or business support schemes.

6. Strategic Review:
   Evaluate the long-term business model viability and consider pivoting or diversifying product offerings if current operations are not sustainable.

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