Negative Balance sheet

[vetoscope]

Anyone able to help make sense of these please? Is the company in trouble? Far too much cash has been drawn out which I think is causing the issues

And this

It means it owes (liabilities) more than the book value of it's assets. No way of knowing why and no way of knowing whether it's in trouble.

It "could" be because they've drawn too much out, or could be because of losses.

The fixed assets may be worth more than the book value or they may be worth less. A balance sheet doesn't have to show current market value of assets like equipment, vehicles, etc.

So, without more information, then it's impossible to draw any meaningful conclusions from those balance sheets. At first glance, things don't look good, but as I say, you don't have the full picture. At best, they should be a kind of "amber" alert that maybe you need to check them out more thoroughly.

Thank you. Company has definitely been drawing too much out, especially cash, I know that for certain. Accountant now advising to draw income through PAYE

PAYE for the directors I mean rather than dividend etc. The accountant is concerned

Can you draw dividends when you have net liabilities? I didn't think you could, don't you need to draw dividends out of profit.

How old is the report, ( I can't read it on the phone) is it likely the situation is worse now

You dont have to draw income via a wage (paye) but you can only pay dividends from profit after all liabilities have been paid. You could pay wages from an agreed overdraft (but not dividends) but unless you plan to get into profit at some point and you can pay your liabilities. You can run a company for years with a negative balance if you have access to cash flow. You normally only get that if someone is willing to put money in the company e.g. a loan.

21-22, most recent tax year, but yes likely to be worse

Yes dividends only from profit. Not sure about the liabilities