FAIRY NUFF LTD

Executive Summary

FAIRY NUFF LTD is in the early stages of its business lifecycle but currently exhibits financial strain marked by poor liquidity and high debt levels relative to equity. Immediate focus on improving cash flow, managing liabilities, and operational development is critical to prevent further financial distress and build a sustainable business foundation.

FAIRY NUFF LTD - Analysis Report

Company Number: 14937548

Analysis Date: 2025-07-20 11:22 UTC

Financial Health Assessment of FAIRY NUFF LTD

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1. Financial Health Score: D

Explanation:
FAIRY NUFF LTD exhibits several concerning financial indicators, notably significant current liabilities exceeding current assets and a high level of long-term debt relative to net assets. While the company is newly formed (incorporated mid-2023) and still in its infancy stage, the financial "vital signs" suggest symptoms of financial stress and working capital deficiency. The absence of employees and limited operational data also limit a full assessment but the balance sheet shows signs of imbalance that should be addressed promptly.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	90,000	Represents investment in long-term assets; relatively high for a micro entity, indicating capital investment or asset acquisition. Healthy sign if assets generate future income.
Current Assets	100	Very low; indicates minimal liquid assets or short-term resources available.
Current Liabilities	13,440	Short-term debts significantly exceed liquid assets, causing a "working capital deficiency" or negative net current assets. This is a symptom of cash flow distress.
Net Current Assets	(13,340)	Negative working capital: company owes more in the short term than it owns in current assets, a warning sign for liquidity problems.
Creditors > 1 year	66,000	Long-term liabilities are substantial relative to net assets, indicating reliance on debt financing.
Net Assets (Equity)	10,660	Modest positive shareholders’ funds, but small compared to total liabilities, indicating a fragile equity base.
Employees	0	No staff employed, possibly indicating a startup phase or non-operational status.

Summary of Vital Signs:

• The company’s liquidity "pulse" is weak: cash and equivalents are almost non-existent compared to current obligations.
• The balance sheet shows a "symptom" of distress in working capital management.
• The capital structure is highly leveraged, with debt dominating over equity.
• No operational workforce, which may limit revenue generation in near term.

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3. Diagnosis

FAIRY NUFF LTD’s financial condition can be likened to a patient with a weak heart and low blood pressure — the company’s "cash flow" is critically low (current assets £100 vs current liabilities £13,440), suggesting poor short-term financial health. Despite owning fixed assets worth £90,000, these are likely illiquid and cannot be readily converted to meet immediate obligations.

The significant long-term creditor balance (£66,000) further burdens the company’s financial stability. Shareholders’ funds of just £10,660 are insufficient to comfortably buffer the high liabilities, indicating a risk of solvency issues if revenues do not materialize or if liabilities must be called upon.

The lack of employees suggests the company may be in a pre-operational or holding phase, which could explain limited income generation and cash reserves. However, this also means the company has not yet established a steady revenue stream to support debt servicing or operational expenses.

Overall diagnosis: The company is "unwell" financially, with symptoms of liquidity strain and leverage risk. Immediate intervention is needed to prevent progression to insolvency or financial distress.

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4. Recommendations

1. Improve Liquidity (Healthy Cash Flow):

   • Seek to increase current assets, particularly cash or equivalents, to cover short-term liabilities. This could involve injecting working capital from shareholders or securing short-term financing.
   • Review and renegotiate payment terms with creditors to extend liquidity runway.

2. Manage Debt Levels (Reduce Financial Burden):

   • Explore options to refinance or restructure long-term debt (£66,000) to more manageable terms or convert some debt to equity if feasible.
   • Limit further borrowing until cash flow stabilizes.

3. Operational Development:

   • Recruit key personnel to enable business activity and revenue generation. Without operational staff, the company risks remaining non-revenue generating, worsening financial health.
   • Develop a clear business plan and revenue model to attract investment or loans.

4. Regular Financial Monitoring:

   • Institute monthly cash flow forecasting and financial reporting to detect early signs of distress.
   • Engage an accountant or financial advisor to assist with budgeting and financial controls.

5. Consider Asset Utilization:

   • Evaluate the use or sale of fixed assets (£90,000) if immediate cash is required, ensuring any disposals do not impair operational capability.

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