LCM STOICA LTD

Executive Summary

LCM STOICA LTD is a newly incorporated micro retail business with positive short-term liquidity but negative net assets indicating financial strain. Immediate focus on strengthening equity, managing long-term debt, and improving profitability is essential to enhance its financial health and ensure sustainable operations.

LCM STOICA LTD - Analysis Report

Company Number: 14803416

Analysis Date: 2025-07-29 14:54 UTC

Financial Health Assessment for LCM STOICA LTD

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1. Financial Health Score: D

Explanation:
The company shows some positive signs such as net current assets and shareholder funds; however, the presence of long-term creditors exceeding current asset levels and resulting negative net assets indicates financial distress. As a recently incorporated micro-entity, the financial foundation is fragile, warranting cautious monitoring and remedial action.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	6,041	Modest investment in long-term resources typical for a micro retail company.
Current Assets	38,013	Healthy short-term assets, mainly cash and stock, indicating liquidity potential.
Current Liabilities	28,382	Obligations due within one year; manageable but significant relative to current assets.
Net Current Assets	9,631	Positive working capital, a "healthy pulse," meaning the company can cover short-term debts.
Creditors due after one year	30,626	Substantial long-term liabilities, a "symptom of distress" since it exceeds net current assets.
Net Assets	-14,954	Negative equity suggests liabilities outweigh assets, indicating financial weakness or insolvency risk.
Shareholders' Funds	-14,954	Reflects the owner's residual interest is negative, an unhealthy sign for business sustainability.

Additional notes:

• The company employs 3 people, which aligns with typical micro-entity operational scale.
• The director holds 75-100% control and voting rights, indicating centralized decision-making.

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3. Diagnosis

LCM STOICA LTD, as a micro retail business in its first financial year, shows "symptoms of financial strain." While it maintains positive net current assets, ensuring it can meet immediate obligations, the negative net assets and shareholders' funds reveal that total liabilities (especially long-term creditors) exceed total assets by nearly £15,000. This imbalance signals that the company’s capital structure is currently unsustainable without further capital injections or debt restructuring.

The presence of long-term creditors greater than net current assets hints at potential liquidity and solvency risks in the medium term. This could be due to startup financing or operational losses in the first year. The relatively small fixed assets base corresponds with a retail operation focused on inventory and short-term assets rather than heavy capital investment.

Overall, the company is "breathing but weak," with a fragile financial constitution that requires prompt attention to prevent deterioration.

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4. Recommendations

To improve the financial wellness of LCM STOICA LTD, the following steps are advised:

• Strengthen Capital Base: Consider owner equity injections or seek external investors to improve net assets and reduce solvency risk. This will provide a financial buffer and strengthen the balance sheet.

• Manage Long-Term Debt: Engage with creditors to renegotiate terms of the £30,626 long-term liabilities. Spreading payments or converting some debt to equity could alleviate pressure.

• Improve Profitability: Focus on operational efficiency and sales growth within the specialized retail segments (bread, cakes, fruit, vegetables). Healthy profit margins will build retained earnings and improve reserves.

• Cash Flow Monitoring: Maintain strict control on cash flow to ensure ongoing liquidity. Implement regular cash flow forecasts to anticipate shortfalls.

• Cost Control: Given the small scale (3 employees), review staffing and overhead costs carefully to avoid unnecessary expenses.

• Regular Financial Review: Conduct periodic financial health checks, akin to medical check-ups, to catch emerging issues early.

• Strategic Planning: As a new company, develop a clear business plan with realistic financial projections to guide growth while maintaining financial stability.

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