Company Number: 12830726

Analysis Date: 2025-07-19 12:56 UTC

Financial Health Assessment for BE23 COFFEE & KITCHEN LTD

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1. Financial Health Score: D

Explanation:
The company is showing significant signs of financial distress in the latest financial year (2024). While it had a positive net current asset position in previous years, the 2024 accounts reveal a sharp deterioration with net current liabilities of £9,893 and negative shareholders' funds of the same amount. This indicates the company's liabilities exceed its current assets, a critical symptom of cash flow strain and potential solvency issues.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£857	Very low liquid assets available; significant drop from £5,070 in 2023.
Current Liabilities	£10,750	More than tripled from £3,265 in 2023, indicating rising short-term debts.
Net Current Assets	-£9,893	Negative working capital; a strong "symptom" of liquidity distress.
Shareholders' Funds	-£9,893	Negative equity; business is technically insolvent on a balance sheet basis.
Average Employees	2	Small workforce consistent with micro-entity size.
Share Capital	£100	Minimal capital injection; limited buffer for losses.

What these vital signs indicate:

• The company’s cash and liquid assets have substantially depleted over the year.
• There is a sharp increase in creditors due within one year, which the company currently lacks sufficient current assets to cover.
• Negative shareholders' funds mean the company’s liabilities exceed its assets, a critical red flag for financial health.
• The company remains a micro entity with minimal resources and a small team, limiting operational scale and financial flexibility.

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3. Diagnosis: What the Financial Data Reveals About Business Health

The financial "symptoms" point towards a company under considerable financial stress:

• Liquidity Crisis: The drop in current assets coupled with rising current liabilities means the company may be struggling to meet short-term obligations, risking insolvency if this trend continues.
• Eroded Capital Base: Negative shareholders' funds indicate accumulated losses exceeding the initial share capital and any retained earnings, signaling the business is "unwell" from a balance sheet perspective.
• Potential Operational Challenges: The micro size and small employee base limit the company's ability to absorb shocks or quickly generate cash flow.

Overall, the company is in a fragile financial state, with a risk of further deterioration if corrective actions are not taken soon.

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4. Recommendations: Steps to Improve Financial Wellness

Immediate Actions:

• Cash Flow Management: Prioritize improving cash inflows and negotiating extended payment terms with creditors to reduce immediate liquidity pressure.
• Cost Control: Rigorously review and cut non-essential expenses to preserve cash.
• Capital Injection: Consider additional equity investment or short-term financing to restore positive net working capital and shore up the balance sheet.

Medium-Term Strategies:

• Revenue Growth: Explore opportunities to increase sales or diversify income streams to rebuild cash reserves.
• Debt Restructuring: Engage creditors to restructure or refinance short-term debts, improving financial breathing space.
• Financial Monitoring: Implement regular financial health checks to detect early signs of distress and enable proactive management.

Long-Term Considerations:

• Business Model Review: Assess business viability and consider strategic pivots if current operations are unsustainable.
• Stakeholder Communication: Maintain transparent communication with shareholders, creditors, and staff to manage expectations and support.

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