LABEL STORE (FOR THE ANIMALS) LTD

Executive Summary

LABEL STORE (FOR THE ANIMALS) LTD displays signs of liquidity stress with negative working capital and limited cash reserves, indicating short-term financial strain. However, stable fixed assets and modest net asset growth provide a foundation to build upon. Immediate focus on cash flow management and creditor negotiations is critical to restore financial health and ensure sustainable operations.

LABEL STORE (FOR THE ANIMALS) LTD - Analysis Report

Company Number: 13074944

Analysis Date: 2025-07-29 18:27 UTC

Financial Health Assessment for LABEL STORE (FOR THE ANIMALS) LTD

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress primarily due to a significant working capital deficit and low liquidity, despite having positive net assets. The net current liabilities and very tight cash position indicate potential cash flow challenges. However, the presence of tangible fixed assets and positive net assets provides some cushion against insolvency risks.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Fixed Assets	57,616	Stable long-term asset base, mainly property
Current Assets	6,420	Very low short-term resources to cover liabilities
Cash at Bank	2,158	Very limited liquid resources ("pulse" of the business)
Debtors	4,262	Some receivables, but may be slow or uncertain
Current Liabilities	(53,893)	High short-term obligations ("symptom of financial strain")
Net Current Assets (Working Capital)	(47,473)	Negative working capital signals liquidity problems
Net Assets	10,143	Positive equity but small relative to liabilities
Trend in Net Assets (2021-2023)	5,182 → 10,143	Improving net asset base, but still modest

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3. Diagnosis: Financial Condition Overview

Symptoms Analysis:

• The company’s negative working capital (-£47.5k) is a critical symptom indicating it owes significantly more in the short term than it can cover with current assets. This points to a potential liquidity crisis where day-to-day operations may be strained due to insufficient cash and current assets.
• The cash balance is low (£2,158), which acts like a “heartbeat” showing limited capacity to meet immediate expenses or unexpected costs.
• Fixed assets (property) at £57,616 provide some stability, but these are not easily liquidated to meet short-term needs without loss or delay.
• The company is small, private, limited by guarantee with no share capital, typical for a charity or non-profit, which may rely on donations, grants, or external funding rather than commercial revenue.
• The turnover and income details are not explicitly presented, but given the nature (retail via internet/mail order for a charity), income may be irregular or grant-dependent.
• The increase in net assets from 2022 to 2023 (£5,182 to £10,143) is a positive sign, indicating some retained surplus or asset growth. However, the scale remains small compared to liabilities.

Underlying Issues:

• The company appears to be experiencing cash flow difficulties, unable to cover short-term liabilities with liquid assets.
• The high current liabilities suggest possible overdue payments or accruals that could lead to creditor pressure.
• Absence of employees suggests a small or volunteer-run operation, making it vulnerable to operational capacity limitations.
• No audit requirement and small company exemption status reflect limited financial scrutiny but also potentially limited financial controls.

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4. Prognosis: Future Financial Outlook

• Short-term outlook is cautious due to liquidity issues. Without improved cash inflows or restructuring of liabilities, the company may face increased risk of default or insolvency pressures.
• Medium to long-term outlook depends heavily on ability to secure funding, manage creditors, and improve working capital.
• The company’s focus on charitable activities and retail via internet suggests potential for revenue growth if marketing and operations are strengthened.
• Continued asset stability and modest net asset growth offer some hope but are insufficient alone to guarantee sustainability without addressing liquidity.

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5. Recommendations: Improving Financial Wellness

Area	Action	Rationale
Liquidity Management	Negotiate extended payment terms with creditors to reduce immediate current liabilities.	Eases cash flow strain, buying time to improve cash position.
Cash Flow Enhancement	Increase focus on boosting cash inflows via fundraising, grants, or online sales campaigns.	Healthy cash flow is vital for operational “heartbeat.”
Debtor Management	Tighten credit controls and accelerate debtor collections to convert receivables into cash faster.	Improves working capital and reduces reliance on external funding.
Cost Control	Review and reduce non-essential expenses; consider volunteer engagement to minimize costs.	Preserves cash and aligns expenses with income.
Financial Planning	Develop detailed cash flow forecasts and scenario planning to anticipate funding gaps.	Early warning system to manage financial risks proactively.
Asset Utilization	Evaluate possibility of leveraging or monetising fixed assets if cash flow worsens.	Provides fallback liquidity option if needed.
Governance & Reporting	Maintain timely statutory filings and transparent reporting to build stakeholder confidence.	Ensures compliance and supports fundraising efforts.

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Summary

LABEL STORE (FOR THE ANIMALS) LTD is currently facing symptoms of financial distress characterized by a significant working capital deficit and low liquidity, despite owning tangible assets and showing some net asset growth. The company must urgently address cash flow management and creditor relations to stabilize its financial “heartbeat.” With targeted efforts to improve liquidity, control costs, and enhance revenues, the outlook can be improved, but ongoing vigilance is essential to avoid deeper financial strain.