Company Number: 13471491

Analysis Date: 2025-07-29 15:07 UTC

Financial Health Assessment Report for CHOCOMA LIMITED

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1. Financial Health Score: D

Explanation:
CHOCOMA LIMITED shows significant signs of financial distress primarily due to its severe working capital deficit (negative net current assets) and a high level of short-term liabilities relative to current assets. While it has valuable fixed assets (property), the liquidity position is weak, posing risks to day-to-day operations. The score reflects a need for urgent financial restructuring and improved cash flow management.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Fixed Assets (Property)	1,433,789	Strong asset base in property, indicating valuable long-term investments.
Current Assets	60,828	Very low current assets, with cash representing only £14,775, suggesting limited liquidity.
Current Liabilities	1,444,641	Extremely high short-term obligations, mainly owed to group undertakings, creating a liquidity crunch.
Net Current Assets (Working Capital)	-1,383,813	Substantial negative working capital; a critical symptom of financial strain and potential cash flow problems.
Net Assets / Equity	45,735	Positive equity but very low compared to liabilities; slight improvement from previous year but still fragile.
Cash Holdings	14,775	Insufficient cash buffer to cover immediate liabilities, indicating "unhealthy cash flow."
Debtors	46,053	Moderate debtor level; recovery of these funds critical to improve liquidity.
Creditors (Short-term)	1,444,641	Majority of liabilities are due within one year, heightening risk of default if cash flow issues persist.

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3. Diagnosis

CHOCOMA LIMITED’s financial "vital signs" reveal a company with a robust fixed asset base but severe liquidity problems. The company’s current liabilities dwarf its current assets, reflecting an acute "symptom of distress" in its working capital and cash flow management. This negative working capital means the company does not have enough short-term assets to cover its immediate debts, which can lead to operational difficulties such as delayed payments to suppliers or inability to meet payroll.

The bulk of current liabilities are amounts owed to group undertakings, indicating potential intercompany financing or loans. While this can sometimes provide flexibility, it also points to a reliance on internal borrowing to meet obligations—a risky situation if the group’s overall liquidity tightens.

The small positive net assets and shareholders' funds show some retained earnings or capital injection but are minimal relative to liabilities. The company’s inability to reduce current liabilities or boost liquid assets signals underlying challenges in financial management or revenue generation.

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4. Recommendations

To restore financial health and ensure sustainability, CHOCOMA LIMITED should consider the following steps:

a. Improve Liquidity and Cash Flow:

• Accelerate collection of trade debtors and other receivables.
• Evaluate possibilities to convert some fixed assets into cash if urgently needed.
• Negotiate extended payment terms with creditors, especially group undertakings, to ease immediate cash flow pressure.

b. Restructure Short-Term Liabilities:

• Convert some current liabilities into longer-term debt to alleviate short-term repayment burdens.
• Engage with group companies to agree on a formal repayment schedule or debt restructuring.

c. Financial Monitoring & Management:

• Implement rigorous cash flow forecasting and monitoring to detect liquidity issues early.
• Establish tighter credit control policies to reduce debtor days.

d. Strategic Review:

• Consider a strategic review of business operations to identify ways to increase profitability and cash generation, potentially including cost reduction or asset utilisation improvements.

e. Professional Advice:

• Seek advice from financial restructuring experts or insolvency practitioners if liquidity issues worsen, to explore formal restructuring options and avoid insolvency risks.

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Executive Summary

CHOCOMA LIMITED possesses valuable fixed assets but suffers from critical liquidity issues demonstrated by a large working capital deficit and high short-term liabilities predominantly owed to group entities. Immediate action is required to improve cash flow, restructure debts, and enhance financial controls to prevent operational disruption and safeguard the company’s future viability.