Company Number: 13116279

Analysis Date: 2025-07-20 12:05 UTC

Financial Health Assessment of JMJ HAWTHORNE LTD (as at 31 January 2024)

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1. Financial Health Score: C

Explanation:
JMJ HAWTHORNE LTD displays mixed financial indicators. While the company maintains positive net assets and working capital, there is a noticeable decline in net assets and an increase in current liabilities, suggesting emerging pressures on liquidity and solvency. The financial "vital signs" show some symptoms of stress, warranting cautious monitoring and targeted actions.

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2. Key Vital Signs:

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets (Tangible)	12,580	20,861	Significant decrease (~40%), could indicate asset disposals or higher depreciation.
Current Assets	78,907	78,275	Stable, supported mainly by cash and debtors.
Cash at Bank	66,174	73,037	Healthy cash reserves but slightly reduced.
Debtors	11,733	4,238	Increased debtors, may reflect slower collections or higher sales on credit.
Current Liabilities	66,055	61,507	Rising short-term obligations, a cautionary sign.
Net Current Assets (Working Capital)	12,852	16,768	Working capital decreased, indicating tighter liquidity.
Net Assets (Shareholders’ Funds)	23,042	33,665	Declined by ~32%, reflecting reduced retained earnings or accumulated losses.
Share Capital	1	1	Nominal share capital, typical for small private firms.

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3. Symptoms Analysis:

• Decreasing Net Assets: The drop from £33,665 to £23,042 signals that accumulated profits have been drawn down or losses incurred, which could be due to operational challenges or increased expenses.
• Reduced Fixed Assets: The tangible fixed assets have fallen markedly, possibly through depreciation or asset sales, which could impact operational capacity if assets are critical equipment.
• Increased Debtors: Higher receivables may suggest slower customer payments or a shift toward more credit sales, which can strain cash flow if not managed carefully.
• Rising Current Liabilities: An upward trend in short-term creditors and tax liabilities may point to increased operational costs or delayed payments to suppliers.
• Working Capital Contraction: Although still positive, the fall in net current assets means the company has less buffer to cover short-term debts, a potential early warning "symptom" of liquidity stress.
• Healthy Cash Position: Despite the above, cash remains strong at over £66k, which is a positive sign of liquidity.

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4. Diagnosis:

JMJ HAWTHORNE LTD can be likened to a patient showing signs of moderate financial fatigue. The company remains solvent with positive equity and adequate cash reserves, but there are clear symptoms of financial strain: declining net assets, reduced fixed assets, and compressed working capital. These symptoms might be linked to operational inefficiencies or external pressures in the licensed restaurant sector, such as rising costs or delayed customer payments. The company is not in immediate danger but is showing early signs of financial "distress" that require intervention to prevent deterioration.

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5. Prognosis:

If current trends continue without corrective action, the company risks further depletion of net assets and liquidity, which could eventually affect its ability to meet obligations on time and invest in growth. However, with prudent cash flow management, improved debtor collection, and cost control, JMJ HAWTHORNE LTD can stabilize and regain financial strength.

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6. Recommendations:

• Enhance Cash Flow Management: Prioritize timely collection of debtors to convert sales into cash faster, reducing liquidity pressure.
• Review and Control Costs: Analyze expense drivers, particularly fixed asset depreciation and operating expenditures, to identify savings opportunities.
• Manage Payables Strategically: Negotiate favorable payment terms with suppliers to ease short-term cash requirements.
• Asset Utilization Review: Assess whether the reduction in fixed assets impacts business capacity and consider reinvestment if needed.
• Financial Monitoring: Implement monthly financial reviews to detect early signs of distress and respond promptly.
• Explore Revenue Opportunities: Given the nature of the business (licensed restaurant), consider promotional or operational strategies to boost turnover and profitability.
• Consider Professional Advice: Engage with financial advisors or accountants for tailored strategies to improve financial health.

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Medical Analogy Summary:

JMJ HAWTHORNE LTD is exhibiting symptoms akin to a patient with moderate fatigue but stable vital signs. The "pulse" of cash flow is healthy but weakening, and the "blood pressure" of current liabilities is rising. With timely interventions—improving liquidity and controlling costs—the company can recover to full financial health.

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