COCOA LIME LIMITED

Executive Summary

Cocoa Lime Limited is a micro-entity in the start-up phase showing early financial strain with negative net assets but modest improvement in liquidity. The company must focus on strengthening its capital base and managing cash flow carefully to avoid solvency risks. With prudent financial and operational management, there is potential for recovery and growth.

COCOA LIME LIMITED - Analysis Report

Company Number: 14416745

Analysis Date: 2025-07-29 18:14 UTC

Financial Health Assessment: COCOA LIME LIMITED (as of 31 October 2024)

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress with persistent net liabilities and negative shareholder funds since incorporation. While there is a modest improvement in current assets in the latest year, the overall capital structure remains fragile with net liabilities of £208 and accumulated losses. This grade reflects a company that is struggling to build a healthy financial foundation but has not yet reached critical failure.

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2. Key Vital Signs:

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	152	(1,103)	Slight improvement; still very low cash/resources
Net Current Assets	152	(1,103)	Working capital turned positive but minimal
Net Assets (Shareholders' Funds)	(208)	(1,463)	Negative net worth; company owes more than owns
Average Employees	Nil	Nil	No staff employed; low operational scale
Accruals & Deferred Income	(360)	(360)	Liabilities related to income recognition

Interpretation:

• Current Assets & Working Capital: The "pulse" of short-term liquidity shows a weak but positive sign in 2024 vs. a negative position prior years. This indicates the company may be better positioned to meet short-term obligations but still lacks a healthy cash buffer.
• Net Assets & Shareholders' Funds: Persistent negative net assets ("symptom of distress") imply accumulated losses or undercapitalization, which weakens financial stability and the ability to absorb shocks.
• No Employees: Indicates a micro-scale operation, possibly owner-managed, with limited business activity.
• Accruals: Consistent deferred income shows some liabilities waiting to be settled, which keeps pressure on liquidity.

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3. Diagnosis:

Cocoa Lime Limited is in the early "convalescence" stage of its business lifecycle, having been incorporated in late 2022. The financial statements reveal ongoing challenges with building a solid capital base and generating sufficient assets to cover liabilities. The company has not yet achieved a positive net asset position and is operating with minimal resources, which is typical for a micro-entity in the retail confectionery sector starting up.

The presence of negative net assets for consecutive years is a warning "symptom" indicating the company is running at a loss or has incurred start-up expenses not yet recovered. However, the improvement in current assets and net current assets in the latest year suggests some progress in managing cash flow or reducing short-term liabilities.

No employees are reported, highlighting limited scale and possibly part-time or owner-operated business operations.

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4. Prognosis:

If current trends continue, the company may gradually improve its liquidity position but will need to address the negative net asset base to avoid solvency risks. Without additional capital injection, improved profitability, or increased operational scale, the company remains vulnerable to financial stress.

The prognosis is cautiously guarded—there is a chance for financial health improvement, but the company must actively manage cash flows, control liabilities, and seek growth opportunities to build a healthier balance sheet.

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5. Recommendations:

• Improve Capital Structure: Consider injecting additional equity capital or securing manageable financing to restore positive net assets and enhance solvency.
• Strengthen Cash Flow Management: Monitor cash inflows and outflows closely to maintain and grow positive working capital. Focus on timely collection of receivables and controlling payables.
• Increase Revenue Streams: Explore strategies to boost sales and operational scale, such as marketing initiatives or product diversification, to generate profits and reduce accumulated losses.
• Cost Control: Keep overhead costs minimal, potentially by continuing with owner-managed operations or outsourcing non-core activities.
• Regular Financial Monitoring: Establish monthly financial reviews to detect early signs of distress and adjust operations accordingly.
• Seek Professional Advice: Engage with financial advisors or business mentors to optimize financial and operational strategies tailored to the retail confectionery market.

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