G & T THEATRICAL LIMITED

Executive Summary

G & T THEATRICAL LIMITED faces liquidity and solvency challenges, indicated by negative working capital and shareholders’ funds despite a strong cash position. The company must urgently manage liabilities, improve profitability, and consider capital infusion to stabilize its financial health. Without intervention, the business risks ongoing financial distress.

G & T THEATRICAL LIMITED - Analysis Report

Company Number: 13547991

Analysis Date: 2025-07-29 19:01 UTC

Financial Health Assessment Report for G & T THEATRICAL LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits clear symptoms of financial distress, notably persistent negative net current assets (working capital deficit) and negative shareholders’ funds (equity deficit). Despite a healthy increase in cash reserves, the company’s obligations exceed its short-term assets, indicating liquidity strain and potential solvency concerns. The overall financial condition warrants significant attention and corrective action.

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2. Key Vital Signs (Core Financial Metrics)

Metric	2023 (£)	2022 (£)	Interpretation
Current Assets	233,981	40,693	Large increase, primarily driven by cash; suggests improved liquidity resources.
Cash at Bank	216,155	14,801	Healthy cash inflow or capital injection; positive sign for immediate payment capacity.
Debtors	17,826	25,892	Decrease in amounts owed by customers; may indicate tighter credit control or reduced sales.
Current Liabilities	281,464	69,931	Significant increase; growing short-term debts raise liquidity concerns.
Net Current Assets	-47,483	-29,238	Negative working capital shows inability to cover short-term liabilities with short-term assets.
Shareholders’ Funds	-47,683	-29,438	Negative equity signals accumulated losses or undercapitalisation, a key symptom of distress.

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3. Diagnosis: Financial Condition and Underlying Health

• Liquidity Symptoms:
  The company's "vital sign" of cash flow is somewhat paradoxical. On one hand, the cash balance is very healthy (£216k), indicating a strong cash position at the reporting date. However, current liabilities have ballooned to £281k, outpacing current assets by £47k. This "working capital deficit" is akin to a patient having a full blood count but low platelet levels—some parameters appear healthy but critical ones are deficient. The company may face short-term liquidity challenges unless liabilities are managed or refinanced.

• Solvency Symptoms:
  Negative shareholders’ funds indicate the company has accumulated losses exceeding its capital. This is a key symptom of financial distress and raises questions about the long-term viability if losses continue. For a young company incorporated in 2021, this may reflect startup phase losses, but the trajectory is concerning without a clear path to profitability.

• Operational Insights:
  The decrease in debtors suggests improved collections or lower sales volume. The large increase in creditors hints at reliance on supplier credit or deferred payments, which could be a sign of cash flow management issues.

• Governance and Controls:
  The company is small with only two directors and two employees, suggesting a tight management structure. No audit was required, and accounts are prepared under the small companies regime, but this also means less rigorous external scrutiny.

Overall Diagnosis:
G & T THEATRICAL LIMITED is showing symptoms of financial distress primarily through its liquidity and solvency indicators. The company is currently managing to maintain a healthy cash position, but its rising liabilities and negative net assets highlight underlying financial strain. Without intervention, this condition could worsen, limiting operational flexibility and potentially risking insolvency.

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4. Recommendations: Actions to Improve Financial Wellness

1. Improve Working Capital Management:

   • Negotiate longer payment terms with creditors to ease immediate cash outflows.
   • Accelerate debtor collections to convert receivables into cash faster.
   • Consider reducing discretionary expenses to improve net current assets.

2. Capital Injection or Restructuring:

   • Explore fresh equity investment to shore up negative shareholders’ funds and provide a financial buffer.
   • If external investment is not viable, consider director loans or other funding mechanisms.

3. Profitability Focus:

   • Review pricing, cost structures, and operational efficiency to transition from losses to profits.
   • Explore new revenue streams in the theatrical casting sector to boost turnover.

4. Financial Monitoring:

   • Implement regular cash flow forecasting and scenario analysis to anticipate and manage liquidity issues proactively.
   • Engage with financial advisors or accountants for tailored restructuring advice.

5. Transparency and Compliance:

   • Maintain timely filing of accounts and confirmation statements to preserve regulatory compliance and confidence of stakeholders.

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