Company Number: 15156861

Analysis Date: 2025-07-29 18:03 UTC

Financial Health Assessment of ECO PIZZA LTD as at 30 September 2024

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1. Financial Health Score: D

Explanation:
ECO PIZZA LTD is in the early stages of operation with negative net assets and net current assets, indicating financial distress symptoms. The company is currently operating with a significant working capital deficit, which signals liquidity challenges and potential difficulties in meeting short-term obligations without external support or additional capital injection. Due to these early warning signs, the overall financial health is weak, meriting a grade of D.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	3,165	Low level of liquid and short-term assets
Cash at Bank	2,480	Limited cash reserves, a critical component of liquidity
Current Liabilities	30,546	High short-term obligations relative to assets
Net Current Assets	-27,381	Negative working capital ("symptom of liquidity distress")
Net Assets	-13,888	Overall negative equity position ("symptom of insolvency risk")
Shareholders Funds	-13,889	Equity is in deficit, indicating accumulated losses
Tangible Fixed Assets	13,493	Investment in plant and machinery, but not readily liquid

Additional Notes:

• The company employs an average of 5 persons, which suggests operational activity but also fixed cost commitments.
• The company is classified under SIC code 56103 (Take-away food shops and mobile food stands), a sector often requiring strong cash flow management due to perishable goods and competitive pricing.

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3. Diagnosis

ECO PIZZA LTD exhibits significant "symptoms of financial distress," primarily characterized by negative net current assets and net liabilities. The company's current liabilities exceed current assets by a wide margin, indicating a cash flow crunch and potential difficulty in settling short-term debts as they fall due.

The negative shareholders' funds reflect accumulated losses since inception, which is common for a new business but remains a risk factor if losses continue without a turnaround. The tangible fixed assets indicate investment in operational capacity, but these are illiquid and cannot be quickly converted to cash to alleviate immediate financial pressures.

The "healthy cash flow" necessary to sustain day-to-day operations appears compromised. This can lead to challenges in supplier relationships, payroll, and tax obligations, as reflected by the sizeable taxation and social security creditors.

Given the company's recent incorporation (September 2023) and the current financial snapshot, ECO PIZZA LTD is likely in a start-up phase where initial losses and working capital deficits are typical but require urgent management attention to avoid insolvency risks.

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4. Recommendations

1. Improve Liquidity Management:

   • Seek short-term financing or overdraft facilities to cover immediate cash shortfalls.
   • Negotiate extended payment terms with suppliers to ease cash flow pressures.

2. Enhance Working Capital Controls:

   • Monitor and reduce stock levels to free up cash tied in inventory.
   • Accelerate receivables collection processes if applicable.

3. Cost Management:

   • Review operating expenses and staff costs to identify savings without impairing service quality.
   • Control discretionary spending rigorously.

4. Capital Injection:

   • Consider equity financing from the sole shareholder or external investors to restore positive net assets and strengthen the balance sheet.

5. Operational Efficiency:

   • Improve sales and marketing efforts to increase turnover and profitability.
   • Optimize pricing and menu offerings to increase margins in the competitive take-away sector.

6. Regular Financial Monitoring:

   • Implement monthly cash flow forecasting and management reporting to identify emerging issues early ("health check-ups").

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Summary

ECO PIZZA LTD is at a critical early stage with financial "symptoms of distress" primarily due to negative working capital and equity. The company needs urgent financial and operational interventions to restore liquidity, improve cash flow, and build equity. The prognosis is cautiously optimistic if swift corrective actions are taken to stabilize finances and enhance business performance.

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