XTRA MEDIA GROUP LTD

Executive Summary

XTRA MEDIA GROUP LTD faces significant financial challenges, including negative net assets and liquidity shortages, indicating severe financial distress. Immediate focus on cash flow management, debt restructuring, and operational cost control is essential to improve the company’s financial wellness and viability. Without prompt action, the risk of insolvency remains high.

XTRA MEDIA GROUP LTD - Analysis Report

Company Number: 13802434

Analysis Date: 2025-07-29 20:23 UTC

Financial Health Assessment: XTRA MEDIA GROUP LTD

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1. Financial Health Score: D

Explanation:
XTRA MEDIA GROUP LTD shows significant financial distress indicators, including persistent net liabilities and negative shareholders' funds over the past three years. The company's liquidity position is critically weak, with very low current assets compared to current liabilities, and a growing directors’ loan account increasing the overall debt burden. These signs point to a fragile financial condition requiring urgent attention.

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2. Key Vital Signs

Metric	2023 (£)	2022 (£)	Interpretation
Current Assets	239	70	Extremely low cash and short-term assets — weak liquidity.
Current Liabilities	11,634	7,676	Current debts rising, putting pressure on cash flow.
Net Current Assets (Working Capital)	-11,395	-7,606	Negative working capital indicates inability to cover short-term debts.
Net Assets	-11,754	-7,966	Company is insolvent on a balance sheet basis; liabilities exceed assets.
Shareholders' Funds	-11,755	-7,967	Ongoing accumulated losses erode equity.
Directors Loan Account (Long-Term Liability)	11,634	7,676	Increasing reliance on director funding — potential liquidity lifeline but adds to debt.
Average Employees	5	5	Stable headcount, but fixed costs may strain cash flow.

Interpretation:
The company resembles a patient with a weak pulse and signs of systemic financial stress. The "healthy cash flow" is absent, and the "symptoms of distress" include negative working capital, growing debt to directors, and negative equity. Without intervention, the risk of insolvency or forced restructuring increases.

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3. Diagnosis

• Liquidity Crisis: The company’s current assets, primarily cash, are insufficient to meet current liabilities, indicating a liquidity crunch. The negative working capital signals the company cannot comfortably fund day-to-day operations without additional borrowing or capital injection.

• Solvency Concerns: Negative net assets and shareholders' funds reflect accumulated losses and liabilities exceeding assets. The company is technically insolvent on a balance sheet basis.

• Dependence on Director Loans: The directors' loan account has increased significantly, indicating reliance on director funding to keep the business afloat. While this may provide temporary relief, it increases long-term financial risk and potential conflicts.

• Operational Stagnation: Despite five employees, no significant asset base or capital has been built. The lack of growth in assets and persistent losses suggest the company is struggling to generate sustainable profits.

• Early Stage Business Dynamics: Incorporated in late 2021, the company is still in its formative years. New businesses sometimes experience initial losses and cash flow challenges, but continued deterioration over three years raises concerns about the business model viability.

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4. Recommendations

• Immediate Cash Flow Management:

  • Tighten control over cash outflows and accelerate receivables collection to improve liquidity.
  • Explore short-term financing options beyond director loans to diversify funding sources.

• Review and Restructure Debt:

  • Negotiate with directors regarding loan terms to create a manageable repayment plan or consider converting loans into equity to strengthen the balance sheet.

• Cost Rationalisation:

  • Evaluate operational expenses including staffing and overheads to reduce burn rate.
  • Prioritise high-impact activities that can drive revenue growth.

• Strategic Business Review:

  • Assess revenue streams and customer contracts for profitability and sustainability.
  • Explore new market opportunities or partnerships to boost turnover.

• Seek Professional Financial Advice:

  • Engage with turnaround specialists or accountants to develop a formal recovery plan.
  • Monitor financial metrics closely to detect early warning signs and adjust strategies accordingly.

• Future Reporting and Transparency:

  • Maintain timely and accurate financial filings to avoid regulatory penalties and maintain stakeholder confidence.

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Summary

XTRA MEDIA GROUP LTD currently exhibits critical financial distress with negative equity and poor liquidity, akin to a patient showing clear symptoms of financial illness requiring urgent care. Without decisive interventions in cash flow management, debt restructuring, and operational efficiency improvements, the prognosis is precarious. The company’s future financial health depends on swift corrective actions to stabilize and revitalize its business fundamentals.