EBRE LTD

Financial Health Assessment: EBRE LTD

1. Financial Health Score: D (Severe Symptoms of Distress) While the business is currently still operating (Active), it is exhibiting critical symptoms of financial distress. The company is suffering from acute "financial anemia"—a severe shortage of liquid cash to cover immediate obligations. It is only surviving by relying on extended, likely overdue, credit from suppliers, while a massive portion of its supposed assets are tied up in a long-term debtor that is suffocating its working capital.

2. Key Vital Signs * Pulse (True Liquidity): Dangerously Weak. On the surface, the current ratio (Current Assets vs. Current Liabilities) looks passable at roughly 1.0 (£558k vs £554k). However, a closer examination of the medical charts (the filed accounts) reveals a hidden blockage: £512,069 of those current assets is actually an "Other Debtor" falling due after more than one year. If we remove this long-term blockage, the true liquid assets (cash plus inventories) are only £46,172. Against £554,433 in immediate liabilities, the true current ratio drops to a critical 0.08. The business has less than 10p for every £1 it owes in the short term. * Blood Pressure (Trade Creditors): Dangerously High. Trade creditors stand at a staggering £553,053. For an unlicensed restaurant/café, this represents an enormous mountain of unpaid supplier bills. This is the financial equivalent of high blood pressure—the business is surviving only because its suppliers haven't yet forced it into insolvency. * Weight Loss (Net Assets): Chronic Decline. The company’s net assets have been steadily eroding over the last four years, dropping from a healthy £445,661 in 2021 down to £365,112 in 2024. This represents a consistent loss of equity, akin to a patient losing weight unexpectedly year after year. * Respiration (Cash at Bank): Gasping. While cash improved from £3,644 in 2023 to £36,283 in 2024, this is still a dangerously low oxygen level for a business with over half a million pounds in immediate debts.

3. Diagnosis Chronic Cash Flow Anemia with Arterial Blockage. EBRE LTD is suffering from a severe structural imbalance in its working capital. The business is bleeding cash reserves and relying heavily on supplier credit to stay afloat.

The most alarming symptom is the £512,069 classified as "Other Debtors" due after more than one year. In a restaurant business, you do not typically have debtors of this magnitude unless they are director loans, related party loans, or perhaps a franchise/property loan. This massive asset is completely illiquid—it is a blocked artery preventing the business from accessing the cash it desperately needs to pay its everyday expenses. Meanwhile, the company is carrying £553,053 in trade creditors, which strongly suggests they are delaying payments to suppliers because they simply have no cash. This is a dangerous game; if key suppliers decide to cut off credit or demand payment, the business will face immediate terminal insolvency.

4. Recommendations To stabilize this patient and return it to financial wellness, immediate and aggressive treatment is required:

• Clear the Blockage (Collect the Debtor): The £512k debtor must be investigated and collected immediately. If this is money owed by the directors or a related party, it must be repaid to the business to inject vital liquidity. If it is an external loan, aggressive collection efforts or selling the debt must be prioritized.
• Detoxify the Payables (Creditor Management): The business must negotiate payment terms with its £553k in trade creditors. Proactive communication is essential to prevent suppliers from issuing winding-up petitions. Consider proposing structured payment plans to reduce this toxic liability.
• Emergency Transfusion (Cash Injection): If the large debtor cannot be collected quickly, the directors must consider an emergency capital injection (shareholder loan or new equity) to provide the working capital necessary to trade out of this position.
• Diet and Exercise (Cost Control): The steady decline in net assets indicates the business is operating at a loss. A strict review of overheads, staffing (34 employees is a significant wage bill), and cost of goods sold is required to return the restaurant to profitability.