CAKMAK BIRMINGHAM LTD

Executive Summary

CAKMAK BIRMINGHAM LTD has shown signs of financial recovery, moving from net liabilities to a modest positive equity position. While its short-term liquidity is healthy, the company carries significant long-term debt that poses risks. Focused efforts on debt reduction, profitability improvement, and cash flow management will be critical to solidify and enhance financial health going forward.

CAKMAK BIRMINGHAM LTD - Analysis Report

Company Number: 12428637

Analysis Date: 2025-07-29 13:22 UTC

Financial Health Assessment for CAKMAK BIRMINGHAM LTD

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1. Financial Health Score: C

Explanation:
The company shows signs of gradual improvement but remains in a fragile financial position. Its net assets have turned positive after previously being negative, which is a good sign. However, the high level of long-term liabilities compared to modest equity and small fixed assets indicates ongoing financial strain. The company is not in immediate distress but must carefully manage its liabilities and improve profitability to strengthen its financial health.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	1,700	Very low; minimal investment in long-term assets, typical for micro service businesses.
Current Assets	31,880	Adequate liquid assets, mainly cash/debtors.
Current Liabilities	5,463	Manageable short-term debts; company can cover these with current assets.
Net Current Assets	26,417	Positive working capital—"healthy cash flow buffer".
Long-term Liabilities	25,216	Significant burden; nearly equals total assets, a "symptom of financial strain".
Net Assets (Equity)	1,551	Positive but very thin equity base; risk of insolvency if losses occur.
Share Capital	100	Nominal capital indicating small scale.
Employee Count	3	Small team, typical for micro companies.

Additional Notes:

• The company moved from a net liability position (-£1,232 in 2023) to a net asset position (£1,551 in 2024), indicating a mild recovery.
• Long-term liabilities decreased from £33,333 to £25,216, showing some repayment or restructuring.
• Current liabilities slightly increased but remain manageable.
• The company is a micro-entity in hairdressing and beauty treatment, which usually requires low fixed asset investment but depends heavily on cash flow.

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3. Diagnosis

CAKMAK BIRMINGHAM LTD exhibits symptoms of financial recovery after a period of distress. The shift from negative to positive net assets shows the company is "regaining its financial pulse." However, the balance sheet reveals a delicate cardiovascular system—the company's equity cushion is thin, and the large long-term debt load poses ongoing risk.

The current assets comfortably cover short-term liabilities, suggesting a healthy short-term liquidity and ability to meet immediate obligations. However, the relatively high long-term liabilities indicate the company may be carrying a heavy debt burden that could impair growth or cause cash flow stress if revenues falter.

The small number of employees and minimal fixed assets are typical for the sector but also imply limited capacity for expansion without additional investment. The change in directors and shareholder control in mid-2025 suggests a potential shift in management strategy, which could impact future financial health.

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4. Recommendations

To improve financial wellness and build resilience, CAKMAK BIRMINGHAM LTD should consider:

• Reduce Long-Term Debt: Prioritise repayment or refinancing of long-term liabilities to reduce interest burden and improve net asset base. This is akin to lowering blood pressure to reduce cardiac strain.
• Enhance Profitability: Focus on boosting revenues and managing costs carefully to generate positive retained earnings, which will strengthen shareholders' funds and provide a buffer against downturns.
• Improve Cash Flow Management: Maintain strong control over receivables and payables to ensure the "cash flow heartbeat" remains steady and reliable.
• Monitor Financial Ratios Regularly: Keep a close eye on liquidity ratios (current ratio), gearing (debt-to-equity), and profitability metrics to detect early symptoms of distress.
• Strategic Investment: Consider modest, targeted investment in assets or marketing to support growth, but avoid overextending financially.
• Governance and Oversight: With recent director changes, ensure strong leadership and clear financial oversight to sustain recovery.

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