BAKED ON THE BEACH LIMITED

Executive Summary

BAKED ON THE BEACH LIMITED faces severe financial distress marked by negative working capital, low cash reserves, and cessation of trading as of December 2023. The company’s financial health is critical, requiring urgent cash flow management, creditor negotiations, and potential restructuring to address insolvency risks and improve future viability.

BAKED ON THE BEACH LIMITED - Analysis Report

Company Number: 12568439

Analysis Date: 2025-07-20 16:16 UTC

Certainly. Let us proceed with a comprehensive financial health assessment of Baked On The Beach Limited, treating the financial data as a diagnostic tool to evaluate the company’s financial wellbeing.

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1. Financial Health Score: Grade D

Explanation:
The company presents several critical symptoms of financial distress, including persistent negative net current assets and shareholders’ funds, culminating in a cessation of trading as of 31 December 2023. While still active legally, the financial “vital signs” show serious liquidity and solvency issues that place the company’s financial health in a poor category, warranting significant remedial action.

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2. Key Vital Signs

Vital Sign	Latest Value (2023)	Interpretation
Net Current Assets (Working Capital)	-£36,167	Negative working capital indicates that current liabilities exceed current assets by a substantial margin, risking inability to meet short-term obligations. This is a severe symptom of cash flow distress.
Cash at Bank	£239	Critically low cash balance signals minimal liquidity, akin to a patient with dangerously low blood volume, unable to sustain operations.
Debtors (Trade Receivables)	£19,466	Receivables are high relative to cash, indicating possible collection issues or slow cash conversion cycle, adding strain to liquidity.
Current Liabilities	£55,872	Large short-term debts requiring urgent settlement, exacerbating liquidity problems.
Shareholders’ Funds (Equity)	-£36,267	Negative equity is a red flag for insolvency risk, reflecting accumulated losses greater than the capital invested, akin to a deteriorated “net worth” or “body mass” of the business.
Tangible Fixed Assets	£0	Disposal of fixed assets in 2023 suggests liquidation of long-term assets to cover liabilities, a sign of “body wasting” in financial terms.
Going Concern Status	Ceased trading as of 31 Dec 2023	The company has stopped trading and is no longer a going concern, indicating critical failure in business operations.

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3. Diagnosis

• Liquidity Crisis: The company exhibits severe liquidity constraints with negative net current assets and minimal cash on hand. This is equivalent to a patient with dangerously low vital fluid levels, unable to meet immediate demands.

• Solvency Problems: Persistent negative shareholders’ funds over multiple years reveal chronic loss-making or capital erosion. The balance sheet shows that liabilities outweigh assets significantly, an insolvency symptom.

• Operational Cessation: The financial statements explicitly disclose cessation of trading at the balance sheet date and write-down of assets to realizable values. This indicates the company is in the final stages of its financial life cycle, akin to a patient in critical care.

• High Lease Commitments: The company faces lease obligations totaling over £89,000 in the upcoming years, which represent a fixed financial burden that is particularly unsustainable given the current financial condition.

• Receivables Management: Large debtors relative to cash suggest inefficiencies in converting sales to cash quickly, worsening cash flow symptoms.

Overall, the company is financially distressed with poor liquidity, insolvency, and ceased trading, putting it in a critical state.

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4. Recommendations

Given this diagnosis, the following recommendations are made to address and potentially improve the financial health:

1. Immediate Cash Flow Management:

   • Prioritize collection of outstanding receivables aggressively.
   • Negotiate with creditors and lessors to restructure or defer payment obligations to alleviate immediate liquidity pressure.

2. Asset Realisation:

   • If any remaining assets exist, consider orderly disposal to raise cash.
   • Review lease commitments for possible subletting or termination where feasible.

3. Capital Injection or Debt Restructuring:

   • Explore options for fresh capital from shareholders or investors to replenish equity and improve solvency.
   • Consider formal insolvency procedures (administration or voluntary arrangement) to protect the business from creditor actions while restructuring.

4. Business Model Review:

   • Given cessation of trading, evaluate the viability of restarting or pivoting the business model to sustainable operations.
   • If continuation is not feasible, prepare for an orderly winding up to preserve value for creditors and stakeholders.

5. Professional Advice:

   • Engage licensed insolvency practitioners or financial advisors immediately to explore all recovery or exit options.

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Summary

Baked On The Beach Limited is currently in a critical financial condition characterized by severe liquidity and solvency issues, leading to cessation of trading. Immediate measures focusing on cash flow, creditor negotiations, and potential restructuring are essential to prevent further financial deterioration or to manage an orderly exit.