FRESH OUT OF PAPHOS LTD

Executive Summary

Fresh Out Of Paphos Ltd is currently experiencing financial strain characterized by negative working capital and shareholders’ funds, indicating liquidity and solvency challenges. Immediate actions to improve cash flow management and consider capital support are critical to stabilize the company’s financial health and avoid further deterioration.

FRESH OUT OF PAPHOS LTD - Analysis Report

Company Number: 13633183

Analysis Date: 2025-07-20 14:11 UTC

Financial Health Assessment for Fresh Out Of Paphos Ltd (as of 30 September 2024)

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1. Financial Health Score: D

Explanation:
The company’s financial condition shows signs of distress with negative net current assets and shareholders’ funds at the latest year-end. While earlier years reflected positive net assets, the latest figures indicate a weakening balance sheet, suggesting liquidity challenges and potential solvency risks if the trend continues.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	1,566	1,960	Small and declining, indicating limited liquidity
Current Liabilities	1,725	1,351	Rising short-term obligations, increasing pressure
Net Current Assets (Working Capital)	-159	609	Negative in 2024; a symptom of liquidity stress
Shareholders' Funds (Net Assets)	-159	609	Negative equity signals financial distress
Average Number of Employees	1	1	Very small scale, micro entity status

• Current Assets vs Current Liabilities: The company has more short-term debts than liquid assets, indicating a "cash flow congestion" symptom, meaning it may struggle to meet immediate obligations.
• Negative Shareholders’ Funds: This is analogous to a patient showing internal weakness; the company’s net worth has eroded below zero, a critical symptom that requires urgent attention.
• Micro Entity Status: Limited scale business, which may limit access to external finance but also minimizes operational complexity.

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3. Diagnosis

Fresh Out Of Paphos Ltd is exhibiting early signs of financial distress. The company’s liquidity, as measured by net current assets, has shifted from a modestly healthy positive position in previous years to a negative balance in 2024. This "symptom" suggests the company may be relying on short-term borrowing or deferring payments to meet obligations, which can be unsustainable.

The negative shareholders’ funds indicate that the company’s liabilities exceed its assets, akin to a patient whose vital organ functions are impaired. This condition places the company at risk of insolvency if not corrected promptly.

The business operates in the "Other sports activities" sector, is very small-scale with a single employee, and has not yet experienced growth sufficient to build financial resilience.

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4. Recommendations

1. Improve Liquidity Management:

   • Accelerate collection of receivables and review payment terms with suppliers to ease working capital pressure.
   • Reassess cash flow forecasts regularly to anticipate and manage short-term financing needs.

2. Cost Control and Revenue Enhancement:

   • Evaluate operational costs closely, trimming non-essential expenses to preserve cash.
   • Explore revenue opportunities or partnerships within the sports activities sector to boost income.

3. Capital Injection or Financing:

   • Consider a capital injection from the shareholder or seek short-term financing to restore positive net assets.
   • Engage with a financial advisor or lender early to secure manageable financing terms.

4. Ongoing Monitoring:

   • Establish monthly financial reviews focusing on liquidity ratios and net asset position to detect any further deterioration early.
   • Prepare contingency plans including restructuring or turnaround strategies if financial health does not improve.

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Explanation of Financial Concepts (For Business Owners)

• Net Current Assets (Working Capital): This is like your immediate cash reserves after paying off bills due within a year. Negative working capital means you owe more than you own in the short term—this is a "warning sign" your business might soon struggle to pay its bills on time.
• Shareholders' Funds: Think of this as your company’s net worth or the “health” of the business after all debts are accounted for. When this is negative, it’s like having more liabilities than assets, which could lead to insolvency if not addressed.
• Liquidity: This is the company’s ability to convert assets to cash quickly to meet immediate obligations. Healthy liquidity is like having a steady blood flow; poor liquidity can cause systemic problems.

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