Company Number: 12798117

Analysis Date: 2025-07-20 15:28 UTC

Financial Health Assessment for DARGALA BARBER LTD

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1. Financial Health Score: C

Explanation:
The company shows some signs of financial stress in the latest year but retains positive net assets overall. The sharp deterioration in net current assets and net assets in 2024 compared to previous years signals liquidity challenges and potential working capital management issues. While not critical yet, these symptoms warrant close monitoring and action to restore healthier financial stability.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	9,648	1,600	Increased investment in long-term assets.
Current Assets	7,634	8,780	Slight decrease; cash and receivables lower.
Current Liabilities	13,290	2,008	Sharp increase, indicating higher short-term debt.
Net Current Assets (Working Capital)	-5,656	6,772	Negative working capital signals liquidity strain.
Total Assets less Current Liabilities	3,992	8,372	Overall assets minus short-term liabilities decreased significantly.
Net Assets (Equity)	3,279	7,672	Decline in shareholder equity, reflecting losses or withdrawals.
Average Number of Employees	3	4	Small workforce, slightly reduced.
Turnover (last available)	44,760 (2022)	29,910 (2020)	Moderate revenue for a micro entity, no latest turnover data for 2024 yet.

Interpretation of Vital Signs:

• The negative net current assets ("working capital") is a critical symptom indicating the company may struggle to meet short-term obligations without additional funding or cash inflows.
• The increase in fixed assets suggests capital expenditure, which may be beneficial long-term but could contribute to short-term cash strain.
• The declining net assets imply reduced retained earnings or financial losses, a sign of operational or financial challenges.
• The company maintains a small employee base, consistent with its micro-size classification.

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3. Diagnosis

Dargala Barber Ltd is currently showing symptoms of financial distress primarily due to a liquidity squeeze:

• Liquidity Strain: The negative working capital in 2024 is a red flag. This means current liabilities exceed current assets by £5,656, implying difficulty in covering short-term debts and operational expenses from readily available resources.
• Eroding Equity Base: A drop from £7,672 equity in 2023 to £3,279 in 2024 indicates that the company’s accumulated profits or reserves have been significantly depleted. This might be due to operating losses or owner withdrawals.
• Operational Scale: The company remains small with limited turnover and a small workforce, which can be an advantage for nimbleness but also makes it vulnerable to cash flow shocks.
• Capital Investment: Increased fixed assets may position the company for future growth but have contributed to the current liquidity strain if funded by short-term debt.

In medical terms, the company’s financial "pulse" is weak, with symptoms like a "low cash flow" heartbeat and "increased short-term liabilities fever." While not at the point of financial "collapse," caution is needed to prevent deterioration into insolvency.

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4. Recommendations

To restore financial health and strengthen the company’s financial "immune system," the following actions are advised:

• Improve Cash Flow Management: Implement strict controls on receivables and payables to improve liquidity. Consider negotiating longer payment terms with suppliers or faster collections from customers.
• Reduce Short-term Liabilities: Explore restructuring or refinancing short-term debts into longer-term loans to ease immediate cash pressure.
• Review Capital Expenditure: Reassess fixed asset investments to ensure they are essential and aligned with expected return on investment, avoiding unnecessary capital outlays.
• Enhance Profitability: Analyze the cost structure and pricing strategy to improve net income, which will help rebuild equity and reserves.
• Regular Financial Monitoring: Establish monthly cash flow forecasts and financial reviews to detect early warning signs and respond promptly.
• Seek External Advice if Needed: Engage with financial advisors or business support services specializing in small business turnaround to guide recovery.

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