FESTIVAL DRY CLEANERS LTD

Executive Summary

FESTIVAL DRY CLEANERS LTD is currently facing significant liquidity and solvency challenges, with negative working capital and net assets signaling financial distress. While fixed assets remain stable, the company must urgently address cash flow pressures and consider debt restructuring or capital infusion to restore financial health. Without prompt action, these symptoms could worsen and threaten the firm’s viability.

FESTIVAL DRY CLEANERS LTD - Analysis Report

Company Number: 13575565

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

Financial Health Assessment Report for FESTIVAL DRY CLEANERS LTD

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1. Financial Health Score: D

Explanation:
The company exhibits several symptoms of financial distress despite being operational. The negative net current assets and persistent negative net assets indicate liquidity and solvency challenges, warranting a below-average financial health grade. The financial "vital signs" suggest a fragile financial condition that requires careful monitoring and remedial action.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Fixed Assets	149,646	Stable long-term assets; relatively consistent over 3 years.
Current Assets	11,673	Very low liquid assets; insufficient for short-term needs.
Current Liabilities	155,475	High short-term debt obligations; pressure on cash flow.
Net Current Assets	-143,802	Negative working capital; "symptom of cash flow distress."
Total Assets less Current Liabilities	5,844	Slightly positive but minimal buffer after short-term debts.
Creditors falling due after one year	13,300	Additional long-term obligations adding to liabilities.
Net Assets / Shareholders Funds	-7,456	Negative equity; company owes more than it owns.
Employees	0	No employees; possibly outsourced or minimal operations.

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3. Diagnosis

The company’s financial "vital signs" reveal troubling "symptoms":

• Liquidity Strain: Net current assets are deeply negative (£-143,802), suggesting the company does not have enough liquid resources to meet its short-term liabilities. This is akin to a patient with low blood pressure—there is insufficient flow (cash) to sustain normal operations.

• Solvency Concerns: Negative net assets (£-7,456) indicate the company’s total liabilities exceed its total assets. This situation is comparable to a patient whose vital organs are compromised; the company is technically insolvent, which may restrict its ability to raise finance or attract investors.

• Operating Model: The company has reported zero employees, which could imply a very lean operation or reliance on subcontractors. While this reduces overhead costs, it may also limit capacity for growth or resilience.

• Stability of Fixed Assets: Fixed assets remain stable, showing no impairment, which is a relatively positive sign. However, the fixed asset base is substantial compared to the current asset base, potentially indicating capital tied up in non-liquid investments.

• No Audit and Micro-Entity Status: The company benefits from micro-entity accounting exemptions, which means less financial disclosure and scrutiny. This can sometimes mask underlying financial difficulties.

Overall, the company is showing signs of financial "illness" — particularly in liquidity and solvency. Without intervention, these conditions could worsen and threaten ongoing viability.

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4. Recommendations

To improve the financial wellness of FESTIVAL DRY CLEANERS LTD, consider the following actions:

• Enhance Liquidity:

  • Seek to increase cash reserves through better receivables management or obtaining short-term financing.
  • Negotiate extended payment terms with creditors to reduce immediate cash flow pressure.

• Restructure Debt:

  • Explore refinancing options to convert short-term liabilities into longer-term debt, easing the burden on working capital.
  • Consider debt rescheduling or discussions with creditors for more favorable terms.

• Improve Profitability:

  • Review pricing, cost control, and operational efficiencies to improve margins and generate positive cash flow.
  • Evaluate the business model for opportunities to increase revenues or reduce fixed asset burdens.

• Regular Monitoring:

  • Implement monthly cash flow forecasting and financial health monitoring to detect early warning signs of distress.
  • Engage professional advice if financial distress symptoms persist.

• Consider Investment or Equity Injection:

  • Given the negative net asset position, fresh equity or capital injection could restore solvency and strengthen the balance sheet.

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