DEGENERATE ART COLLECTIVE LIMITED

Executive Summary

DEGENERATE ART COLLECTIVE LIMITED shows early signs of financial strain with negative net assets despite positive working capital. This suggests the company is in a fragile startup phase requiring careful management of liabilities and capital. Strengthening equity and building cash reserves are critical next steps to ensure sustainable growth and financial stability.

DEGENERATE ART COLLECTIVE LIMITED - Analysis Report

Company Number: 14878110

Analysis Date: 2025-07-29 12:08 UTC

Financial Health Assessment for DEGENERATE ART COLLECTIVE LIMITED (formerly DEGENERATE COSMETICS LIMITED)

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1. Financial Health Score: D

Explanation:
The company is in its first full financial year of trading, showing early signs of financial stress. While it has positive net current assets (working capital), it reports negative net assets and shareholders' funds, indicating accumulated losses or liabilities exceeding assets. The micro-entity status limits disclosure but the available data suggests a fragile financial position that needs close monitoring.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	16,065	Indicates liquid or easily convertible assets available to meet short-term obligations.
Current Liabilities	13,091	Short-term debts or obligations due within one year.
Net Current Assets (Working Capital)	2,974	Positive working capital ("healthy cash flow buffer"), showing ability to cover short-term debts.
Provisions for Liabilities	3,301	Recognised potential future outflows/liabilities which reduce net assets.
Accruals and Deferred Income	1,000	Obligations or income received in advance, affecting net assets negatively.
Net Assets (Shareholders’ Funds)	-1,327	Negative equity suggests liabilities exceed assets, a symptom of financial distress or early losses.
Average Number of Employees	0	No staff employed, consistent with a start-up or non-operational phase.

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3. Diagnosis

The company is in a fragile startup phase with some initial capital or liquid assets to cover short-term liabilities (positive working capital). However, the presence of provisions and accruals is exerting pressure, resulting in negative net assets. This means the business owes more than it owns when considering all liabilities, a key symptom of financial distress. The negative equity position is a red flag that, if persistent, could threaten solvency.

The absence of employees suggests the business may be in early development or relying on external contractors or the director’s input without payroll costs yet. The director is also the sole significant controller, indicating centralized decision-making but also concentration risk.

The company's exemption from audit and micro-entity filing status means less detailed financial information is available, which limits the full diagnostic picture.

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4. Recommendations

• Improve Capital Structure: Consider an equity injection or shareholder loan to strengthen net assets and reduce the risk of insolvency.
• Monitor Liabilities Closely: Keep tight control over provisions and accruals, ensuring they reflect realistic obligations. Negotiate payment terms to smooth cash flow.
• Build Cash Reserves: Maintain or increase current assets to preserve healthy working capital and buffer against unexpected expenses.
• Develop Revenue Streams: Since no employees are recorded, focus on generating consistent sales or contracts to move towards profitability and positive retained earnings.
• Regular Financial Reviews: Conduct quarterly reviews of financial health metrics to catch early signs of distress and adjust strategies promptly.
• Plan for Growth: As a micro-entity, prepare for future scaling which will require more robust accounting and possibly external funding.

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