BRIGHTER TRADE LTD

Executive Summary

Brighter Trade Ltd is currently facing financial distress marked by negative net assets and significant long-term liabilities despite a robust cash position. The company exhibits healthy liquidity but must address its equity erosion and debt structure to avoid worsening financial health. Strategic debt restructuring, equity recapitalization, and operational adjustments are critical to improving its financial prognosis.

BRIGHTER TRADE LTD - Analysis Report

Company Number: SC677574

Analysis Date: 2025-07-20 19:04 UTC

Financial Health Assessment for Brighter Trade Ltd

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1. Financial Health Score: D

Explanation:
Brighter Trade Ltd shows signs of financial distress, reflected in a negative net asset position and reliance on significant long-term liabilities. While the company’s liquidity position appears strong with healthy cash balances, the overall solvency and equity erosion reduce the financial health grade. The score "D" indicates the company is struggling but not yet at a critical failure stage.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Net Assets (Equity)	£-11,191	Negative net assets indicate liabilities exceed assets – a symptom of financial strain.
Cash at Bank	£89,684	Healthy cash balance suggests good liquidity and ability to meet short-term obligations.
Current Liabilities	£5,375	Low current liabilities relative to cash assets—positive sign for short-term financial health.
Non-Current Liabilities	£95,500	Large long-term liabilities, mostly owed to associates, indicate financial leverage concerns.
Net Current Assets	£84,309	Strong positive working capital ("healthy cash flow") suggests the company can cover short-term debts comfortably.
Fixed Assets	£0	Complete disposal of fixed assets in 2024, potentially indicating asset liquidation or write-offs.
Share Capital	£100	Minimal share capital; equity base is very small relative to liabilities and assets.

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3. Diagnosis

Brighter Trade Ltd exhibits symptoms of financial distress primarily driven by a negative equity position and significant long-term debt obligations. The balance sheet portrays a company that has undergone a substantial asset write-off or disposal, as fixed assets dropped from £101k in 2023 to zero in 2024. This could indicate asset sales or impairments potentially to raise cash or reduce liabilities.

Despite this, the company’s liquidity "vital signs" are quite healthy — cash on hand increased significantly to nearly £90k, far exceeding current liabilities of £5,375. This implies the business can comfortably meet its short-term obligations, reducing immediate risk of insolvency.

However, the long-term liabilities of £95,500, mainly owed to associates, pose a substantial burden. These liabilities exceed net assets and may represent loans or credit extended by stakeholders. The erosion of shareholders’ funds from a positive £4,726 in 2023 to a negative £11,291 in 2024 signals ongoing losses or financial strain.

The removal of fixed assets may also mean the company is losing operational capacity or restructuring its asset base, which could impact future revenue generation.

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4. Recommendations

To improve financial wellness, Brighter Trade Ltd should consider the following actions:

1. Restructure Long-Term Debt:
   Engage with associates and lenders to renegotiate terms, possibly extending maturities or reducing rates to alleviate pressure on equity and cash flow.

2. Rebuild Equity Base:
   Consider a capital injection from shareholders or new investors to restore positive net assets and improve creditor confidence.

3. Asset Strategy Review:
   Assess the impact of asset disposals on operations and explore options to acquire or lease productive assets to sustain revenue generation.

4. Enhance Profitability:
   Implement cost controls and revenue growth strategies to stabilize and improve retained earnings, preventing further equity erosion.

5. Cash Flow Management:
   Maintain strong liquidity management to avoid short-term cash flow issues despite long-term challenges.

6. Regular Financial Monitoring:
   Establish frequent financial reviews to detect early symptoms of distress and adjust strategies promptly.

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