JOHNNY & MINAKSHI LTD

Executive Summary

JOHNNY & MINAKSHI LTD is currently experiencing significant financial distress characterized by negative equity and severe liquidity challenges. Immediate cash flow management, cost reduction, and capital injection are essential to avoid insolvency risks. With prompt and strategic action, the company can stabilize its financial condition and improve future prospects.

JOHNNY & MINAKSHI LTD - Analysis Report

Company Number: 13327720

Analysis Date: 2025-07-29 21:07 UTC

Financial Health Assessment of JOHNNY & MINAKSHI LTD

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1. Financial Health Score: D

Explanation: The company shows clear symptoms of financial distress, with persistent negative net assets and worsening working capital over recent years. The negative equity and current liabilities exceeding current assets indicate an unhealthy financial state, suggesting urgent attention is required to avoid insolvency risks.

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2. Key Vital Signs

Metric	2025 (Latest)	Interpretation
Fixed Assets	£1,026	Very limited long-term asset base; declining over time
Current Assets	£2,311	Low liquid resources to meet short-term obligations
Current Liabilities	£28,888	Significantly high short-term debts
Net Current Assets	-£26,428	Severe working capital deficit; cash flow likely under strain
Net Assets (Equity)	-£25,402	Negative equity; liabilities exceed assets substantially
Share Capital	£100	Minimal initial shareholder funding
Number of Employees	2	Micro business scale with limited human resource base

Interpretation of Vital Signs:

• The negative net current assets (working capital) is a critical symptom of illiquidity—meaning the company likely struggles to pay its short-term debts on time.
• The negative net assets (equity) show that liabilities exceed the company's total assets, a classic sign of financial distress or insolvency risk.
• The decline in fixed assets may indicate asset sales or lack of investment in long-term capacity.
• The minimal share capital and ongoing losses suggest limited financial buffer to absorb shocks.
• The company's micro size and small team imply limited operational scale, which may constrain revenue and cash flow generation.

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3. Diagnosis: Financial Condition Assessment

JOHNNY & MINAKSHI LTD is exhibiting symptoms of chronic financial distress:

• The company's balance sheet shows a worsening liquidity crisis with current liabilities far exceeding current assets, indicating "breathing difficulties" in everyday operations.
• Negative shareholders’ funds signal a "structural weakness" where the business owes more than it owns.
• The company has moved from a modest positive equity position in early 2022 to deep negative territory by 2025, signaling ongoing losses or write-downs.
• The lack of an audit and reliance on micro-entity accounting standards may limit detailed financial insights but does not obscure the evident financial strain.
• The retail sector in which it operates (non-specialised stores with food, beverages, tobacco) often requires tight cash flow management; current liquidity issues jeopardize operational stability.
• The company’s directors have changed since inception, which might reflect strategic or operational shifts, but no clear turnaround is evident in financials.

Overall, JOHNNY & MINAKSHI LTD is in a vulnerable financial state, with high risk of insolvency if corrective actions are not taken promptly.

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4. Recommendations: Actions to Improve Financial Wellness

1. Urgent Cash Flow Management:

   • Conduct a detailed cash flow forecast to identify immediate liquidity needs.
   • Prioritize payment of critical creditors to maintain supply chain and operational continuity.
   • Explore short-term financing options (overdrafts, invoice factoring) to ease cash flow strain.

2. Cost Control and Operational Efficiency:

   • Review and reduce discretionary expenses.
   • Consider renegotiating supplier terms or leases to improve cash outflows.
   • Evaluate workforce productivity relative to revenue generation.

3. Capital Injection or Debt Restructuring:

   • Engage shareholders or external investors for equity injection to restore positive net assets.
   • Negotiate with creditors to restructure or extend payment terms to alleviate short-term pressure.

4. Strategic Business Review:

   • Analyze core business activities and profitability to identify loss-making areas.
   • Explore new revenue streams or product lines to boost sales.
   • Consider professional advice on turnaround strategies or insolvency options if necessary.

5. Improved Financial Reporting and Monitoring:

   • Adopt regular internal financial reviews beyond minimum reporting requirements.
   • Implement key performance indicators to monitor liquidity, profitability, and solvency.

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Medical Analogy Summary

The company’s financial "vital signs" show severe distress—much like a patient with dangerously low blood pressure and oxygen levels. Without emergency intervention, the risk of "collapse" (insolvency) is high. Timely "treatment" with cash flow support, cost control, and capital reinforcement is critical to stabilize and restore health.

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