BERRY COCOA LIMITED

Executive Summary

Berry Cocoa Limited is currently in a fragile financial condition marked by negative equity and liquidity challenges, indicating ongoing operational difficulties. Without prompt action to improve cash flow and restructure liabilities, the company faces a heightened risk of insolvency. Strategic financial management and operational improvements are essential to restore stability and ensure future viability.

BERRY COCOA LIMITED - Analysis Report

Company Number: 12815096

Analysis Date: 2025-07-20 11:34 UTC

Financial Health Assessment for Berry Cocoa Limited

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1. Financial Health Score: D

Explanation:
Berry Cocoa Limited is currently exhibiting signs of financial distress. The company has consistent negative shareholders' funds (equity), significant net current liabilities, and limited cash reserves. These factors indicate the company is struggling to maintain a healthy financial position and is potentially at risk if the situation does not improve.

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2. Key Vital Signs

Metric	2023 (£)	Interpretation
Shareholders' Funds	-17,051	Negative equity signals accumulated losses; company owes more than it owns.
Net Current Assets	-18,911	Negative working capital indicates inability to cover short-term liabilities with current assets.
Current Assets	9,005	Includes cash and stock; limited liquidity.
Cash Balance	421	Very low cash on hand suggests cash flow constraints.
Current Liabilities	27,916	High short-term debts to be settled soon; pressure on liquidity.
Fixed Assets (Net Book Value)	1,960	Modest long-term asset base; limited ability to leverage assets for financing.
Bank Loans and Overdrafts	10,005	Significant portion of liabilities are bank borrowings, increasing financial burden.

What these vital signs indicate:

• The company’s negative equity is a critical symptom of financial distress, reflecting that accumulated losses have eroded the owners’ stake in the business.
• Negative net current assets (working capital deficit) act like a "low pulse" warning, showing the company may struggle to meet its short-term obligations without external support.
• The insufficient cash reserves act as a "weak heartbeat," indicating limited liquidity and potential difficulty in day-to-day operations.
• The presence of bank loans and overdrafts adds pressure due to fixed repayment commitments, increasing the risk of insolvency if cash flow worsens.

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3. Diagnosis

Berry Cocoa Limited is in a precarious financial state characterized by persistent losses that have led to negative net worth. The company’s working capital deficit and low cash balances are symptoms of liquidity stress, meaning it may face challenges paying suppliers, creditors, or meeting payroll without additional financing or operational improvements.

Despite being a small private limited company with modest fixed assets, the company’s current financial structure is unsustainable in the long term without corrective action. The recurring negative shareholders' funds over the past years indicate ongoing operational or financial difficulties.

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4. Prognosis

If Berry Cocoa Limited does not address its liquidity and profitability issues, the risk of insolvency escalates. The current financial indicators suggest a fragile state where the company could face difficulties securing new finance or extending credit terms from suppliers.

However, the situation is not irreparable. Timely interventions focused on improving cash flow, reducing liabilities, and enhancing operational efficiency can stabilize the company’s financial health.

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5. Recommendations

1. Improve Cash Flow Management:

   • Accelerate collection of receivables and optimize inventory levels to free up cash.
   • Negotiate extended payment terms with suppliers to reduce immediate cash outflows.

2. Restructure Liabilities:

   • Engage with lenders to refinance or reschedule bank loans and overdrafts to ease short-term pressure.
   • Explore options for equity injection or shareholder loans to strengthen capital base.

3. Cost Control and Profitability:

   • Review operating expenses rigorously to identify and cut non-essential costs.
   • Evaluate pricing strategies and product mix to improve margins.

4. Financial Monitoring:

   • Implement regular financial health checks (monthly management accounts) to detect early warning signs.
   • Seek professional advice for turnaround planning if distress deepens.

5. Strategic Review:

   • Assess market position and business model viability to ensure long-term sustainability.
   • Consider diversification or partnerships to enhance revenue streams.

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Medical Analogy Summary

Berry Cocoa Limited’s financial "vitals" reveal a company suffering from "chronic financial fatigue" with "symptoms" including negative equity and weak liquidity. The "heart" of the business—the cash flow—is weak, threatening the company’s ability to survive without intervention. Immediate "treatment" through cash flow optimization, debt restructuring, and cost management is necessary to restore "health" and avoid "financial collapse."

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