LABEL 22 LTD

Executive Summary

LABEL 22 LTD shows early-stage financial stability with positive equity but faces liquidity challenges evidenced by negative working capital. Immediate attention to cash flow management and working capital improvements is essential to avoid financial distress. With prudent financial care and strategic growth efforts, the company can strengthen its financial health and sustain operations in the performing arts sector.

LABEL 22 LTD - Analysis Report

Company Number: 14017419

Analysis Date: 2025-07-20 11:24 UTC

Financial Health Assessment: LABEL 22 LTD

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1. Financial Health Score: C

Explanation:
LABEL 22 LTD demonstrates a modest financial footing typical for a recently incorporated micro-entity. While the company shows positive net assets (£19,718) indicating some equity buffer, the presence of significant net current liabilities (-£36,684) signals liquidity challenges. This mixed picture warrants a cautious grade of C, reflecting a "watchful" financial condition needing attention to short-term cash flow and working capital management.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Fixed Assets	£56,402	Reflects investment in long-term assets; healthy sign of capital investment for a micro firm.
Current Assets	£12,573	Represents short-term resources, including cash, receivables, and stock—limited in size.
Current Liabilities	£49,257	Debts due within one year; relatively high compared to current assets, indicating pressure.
Net Current Assets (Working Capital)	-£36,684	Negative working capital is a symptom of liquidity stress; potential challenge to meet short-term obligations.
Net Assets (Equity)	£19,718	Positive net assets indicate the company is not insolvent and has some equity cushion.
Cash (2023)	£1	Minimal cash balance last year; no recent cash figure disclosed but inferred low liquidity.
Employees	0	No employees; possibly owner-operated, which may reduce overhead costs but limit scalability.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Concerns ("Symptoms of Distress")
  The company has a negative net current asset position, meaning its short-term liabilities exceed its short-term assets by £36,684. This is a critical warning sign akin to a patient with low blood pressure—cash flow is insufficient to cover immediate debts, presenting risk of financial strain if not managed carefully.

• Capital Structure ("Vital Organ Status")
  Despite short-term liquidity issues, the company holds positive net assets (£19,718), showing that its total assets exceed liabilities. This suggests the underlying capital structure is stable, like a heart still pumping effectively, but the circulation (cash flow) is weak.

• Recent Growth Stage ("Early Lifecycle")
  Incorporated in March 2022, LABEL 22 LTD is in its early development phase. The absence of employees and limited current assets hint at a lean operation, potentially focused on building its business model in the performing arts sector.

• Limited Financial Disclosure
  As a micro-entity, the company files simplified accounts with limited detail on profitability, revenue, or cash flows, restricting a full clinical picture. The profit and loss account is not publicly available, so we cannot assess profitability or operational efficiency directly.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Improve Working Capital Management
  Focus on increasing current assets, especially cash and receivables, to cover short-term liabilities. This could involve negotiating longer payment terms with suppliers, accelerating customer payments, or securing short-term financing to alleviate liquidity pressure.

• Cash Flow Monitoring and Forecasting
  Implement rigorous cash flow forecasting to anticipate and manage periods of cash shortages. Regular monitoring will act like vital signs tracking, allowing preemptive action before liquidity issues worsen.

• Consider Capital Injection or Loan Facilities
  To strengthen the balance sheet and provide a cash buffer, the owner (Miss Rachael Crosby) might consider injecting additional equity or obtaining a working capital loan. This would bolster the company's financial resilience during growth.

• Explore Revenue Growth Opportunities
  Being in the performing arts sector, evaluate potential income streams, partnerships, or grants to enhance revenue generation. Diversifying income sources will improve the business’s financial "immune system."

• Maintain Low Overhead and Operational Efficiency
  With no employees currently, continue controlling fixed costs to preserve cash. As growth occurs, carefully plan any hiring or investment to avoid overextension.

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