BARKAT HALAL BUTCHERS LTD

Executive Summary

Barkat Halal Butchers Ltd is demonstrating a stable and improving financial condition, highlighted by strong liquidity and growing net assets. The company shows healthy operational cash flow and manageable liabilities, positioning it well for sustainable growth. Continued focus on cash flow management and debtor control will further enhance its financial wellness.

BARKAT HALAL BUTCHERS LTD - Analysis Report

Company Number: 13608314

Analysis Date: 2025-07-19 12:42 UTC

Financial Health Assessment: BARKAT HALAL BUTCHERS LTD (as at 30 September 2024)

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1. Financial Health Score: B+

Explanation:
Barkat Halal Butchers Ltd demonstrates sound financial health with improving liquidity, positive net assets growth, and healthy cash reserves. While the company is relatively young and small, recent trends show positive momentum. However, some areas such as reliance on director support and limited asset base suggest caution, warranting a "B+" rather than an "A" grade.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£13,266	Stable asset base, mainly plant, machinery, vehicles.
Current Assets	£12,751	Healthy increase from prior year, includes cash and stock.
Cash at Bank	£8,068	Strong cash position, an indicator of good liquidity.
Debtors	£2,583	Rising receivables; manageable but should be monitored.
Current Liabilities	£3,879	Reduced from previous year; manageable short-term debts.
Net Current Assets (Working Capital)	£8,872	Positive and significantly improved - "healthy cash flow" symptom.
Net Assets (Shareholders’ Funds)	£22,138	Increase by ~64% from prior year, sign of growing equity and retained earnings.

Additional Observations:

• Stock levels increased from £600 to £2,100, indicating either higher sales volume or stockpiling.
• Debtors appeared in 2024 after being nil in 2023, reflecting possible credit sales or timing differences.
• Current liabilities decreased substantially, indicating better short-term debt management.
• The company is exempt from audit under small company rules, so data is based on unaudited filings.

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3. Diagnosis: Financial Condition and Business Health

The company shows clear signs of financial strengthening. The "vital signs" such as increased cash reserves and net current assets point to improved liquidity and operational efficiency. The positive net current assets represent a "healthy cash flow" state, reducing the risk of short-term cash crunches.

Growth in net assets and shareholders’ funds reflects profitable operations or capital injections, which is a positive "symptom" indicating business expansion or retained earnings accumulation.

However, the presence of debtors (trade receivables) needs monitoring to ensure timely collections. The company’s fixed assets are modest, consistent with its micro/small category, and reflect investment in essential operating equipment.

The directors’ note on going concern and their support indicates that the company is not currently facing distress but may rely on management backing to continue smoothly. This is a common scenario in small private companies but should be watched as an early warning "symptom" if conditions change.

In summary, Barkat Halal Butchers Ltd is in a stable and improving financial position with no immediate "symptoms of distress." The company is showing a healthy balance between assets, liabilities, and equity, supporting sustainable operations.

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4. Recommendations: Path to Improved Financial Wellness

• Maintain Strong Liquidity: Continue to monitor cash levels and manage working capital carefully to preserve the strong liquidity position. Avoid unnecessary stock buildup that ties up cash.

• Improve Debtor Management: Implement tighter credit control policies to reduce debtor days and ensure prompt payment from customers to keep cash flow healthy.

• Plan for Asset Utilization: Review fixed asset utilization to ensure investments in machinery and vehicles are yielding operational efficiencies and support growth.

• Build Reserves and Reduce Reliance on Directors: Aim to strengthen the capital base by retaining profits and minimizing reliance on director loans or support to improve financial independence.

• Prepare for Growth: With improving financial stability, consider strategic plans for scaling operations or expanding product lines, ensuring adequate funding and risk management.

• Regular Financial Reviews: Conduct periodic financial health checks to catch any early warning signs ("symptoms") of financial strain and adjust strategies accordingly.

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