COCO LOCO COFFEE LTD

Executive Summary

COCO LOCO COFFEE LTD is a very young micro company showing typical start-up financial vulnerabilities, particularly in liquidity and capital adequacy. Immediate focus on working capital management and building cash reserves is essential to improve its fragile financial health. With careful financial discipline and operational control, the company can stabilize and build a stronger financial foundation.

COCO LOCO COFFEE LTD - Analysis Report

Company Number: 14471459

Analysis Date: 2025-07-20 11:44 UTC

Financial Health Assessment Report for COCO LOCO COFFEE LTD

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1. Financial Health Score: D

Explanation:
COCO LOCO COFFEE LTD displays several concerning financial signs typical of a start-up in its first year. While the company is still operational and compliant with filing deadlines, its liquidity position and very low net asset base indicate fragile financial health. The score reflects early-stage risks and the need for immediate improvements to avoid distress.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	9,375	Modest investment in long-term assets, typical for a micro-entity in retail.
Current Assets	3,133	Limited cash and short-term resources available to meet immediate obligations.
Current Liabilities	4,043	Short-term debts exceed current assets, signaling working capital deficiency (-910 net current assets).
Net Current Assets	-910	Negative working capital indicates potential liquidity strain — the company may struggle to pay short-term debts timely.
Creditors > 1 Year	7,403	Significant long-term liabilities relative to assets; may be loans or director advances.
Accruals and Deferred Income	1,056	Obligations yet to be paid, adding short-term pressure on cash flow.
Net Assets	6	Extremely low equity base, indicating the company’s resources barely cover liabilities.
Shareholders Funds	6	Reflects minimal retained earnings or capital; very thin financial buffer.

Additional Notes:

• Director loans (£1,445 outstanding) exist, which are unsecured and interest-free, showing internal financial support but limited external creditworthiness.
• Average employees: 1, suggesting a very small operation.
• The company is newly incorporated (Nov 2022), so first-year financials are naturally modest and reflect start-up phase challenges.

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3. Diagnosis: Financial Condition and Underlying Health

COCO LOCO COFFEE LTD exhibits symptoms of financial fragility common to new micro-entities. The negative working capital ("unhealthy cash flow") is a primary symptom of liquidity strain, meaning the company may have difficulty meeting short-term obligations without external support. Although fixed assets provide some capital base, these are modest and cannot be easily liquidated for cash.

The very low net assets and shareholders’ funds indicate that the company has not yet generated profits or built reserves to cushion against operational or market shocks. The presence of director loans shows reliance on insider funding, which is common but unsustainable as a long-term financing strategy.

Given the retail confectionery SIC code, the business likely faces operational costs tied to inventory and sales cycles, which must be carefully managed to avoid cash crunches.

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4. Recommendations: Path to Financial Wellness

• Improve Working Capital Management:
  Actively manage receivables, payables, and stock levels to reduce the negative net current assets. Consider negotiating longer payment terms with suppliers or accelerating customer payments to boost liquidity.

• Increase Cash Reserves:
  Explore options to inject additional equity or secure external short-term financing to strengthen the cash position and provide a buffer against unexpected expenses.

• Monitor Director Loans:
  Formalize repayment plans for director advances to ensure clarity and avoid future conflicts. Consider converting some loans into equity if feasible.

• Focus on Profitability:
  Implement tight cost controls and optimize pricing strategies to move towards positive retained earnings and build shareholders’ funds.

• Regular Financial Monitoring:
  Establish monthly cash flow forecasts and financial reviews to detect early signs of distress and act promptly.

• Plan for Growth:
  As a micro company, scaling carefully while maintaining financial discipline will be critical. Seek advice on grants or support schemes available for small businesses in the retail food sector.

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