Company Number: 14597493

Analysis Date: 2025-07-29 12:59 UTC

Financial Health Assessment of GRACIA GROUP LTD

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1. Financial Health Score: D

Explanation:
The company exhibits significant financial distress as indicated by negative net current assets and net liabilities. Given it is a micro-entity with minimal operations and no employees, the negative working capital signals an early warning of financial strain. The score reflects a need for urgent financial corrective measures to improve liquidity and solvency.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	309	Very low cash and short-term assets, insufficient for operations
Current Liabilities	817	Short-term debts exceed available assets
Net Current Assets (Working Capital)	-508	Negative working capital indicates liquidity issues
Total Assets Less Current Liabilities	-508	Company owes more than it owns in the short term
Net Assets / Shareholders’ Funds	-508	Negative equity signifies insolvency on a balance sheet basis
Average Number of Employees	0	No staff, indicating limited business activity or start-up phase

Interpretation:

• The negative working capital is like a "weak pulse" in financial terms, suggesting the company may have difficulty meeting immediate obligations.
• Negative net assets ("deep deficit") indicate the company’s liabilities exceed its assets, a serious red flag akin to a patient showing symptoms of organ failure.
• The absence of employees suggests the entity may be in a nascent or dormant operational state, possibly relying on owner input only.

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3. Diagnosis

GRACIA GROUP LTD is in the early stages of operation (incorporated January 2023) and currently shows symptoms of financial distress primarily due to inadequate liquidity and negative equity. The low current assets relative to liabilities imply the company may struggle to pay debts as they fall due, putting it at risk of insolvency if these conditions persist.

The negative net asset position suggests the business is currently "under the weather," possibly absorbing start-up costs or initial losses without yet generating meaningful revenue or capital injection. As a micro-entity operating in the performing arts sector, it may be relying heavily on owner investment or credit.

No audit requirement and exemption status reflect limited complexity but also a lack of external financial scrutiny, which can mask emerging financial health issues if not carefully managed.

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4. Recommendations

• Improve Liquidity: Increase current assets by injecting cash or converting other assets into cash. This is akin to stabilizing a patient’s vital signs by ensuring adequate fluid levels.
• Reduce Short-term Liabilities: Negotiate longer payment terms or reduce debts to improve working capital and avoid liquidity crises.
• Capital Injection: Consider an equity injection or loan from the owner (Miss Ella-Grace Gregoire) who holds full control to strengthen the balance sheet and reverse negative net assets.
• Cost Control: Monitor and reduce operational expenses to minimize cash outflows during the start-up phase.
• Revenue Generation: Develop and implement a business plan focused on generating sustainable income streams in the performing arts sector.
• Regular Financial Monitoring: Establish monthly cash flow and financial reporting to detect early signs of distress and take corrective action promptly.
• Seek Professional Advice: Engage with accountants or financial advisors to develop a turnaround or growth strategy tailored to the company’s sector and size.

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