LOVE YOU A LATTE LTD

Executive Summary

LOVE YOU A LATTE LTD faces ongoing financial challenges with persistent negative working capital and shareholders' funds, indicating financial distress. While some improvement is noted in the latest year, the company remains vulnerable and must prioritize liquidity management, cost control, and capital reinforcement to regain stability and ensure survival in the competitive licensed restaurant sector.

LOVE YOU A LATTE LTD - Analysis Report

Company Number: 13135881

Analysis Date: 2025-07-20 16:16 UTC

Financial Health Assessment of LOVE YOU A LATTE LTD

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1. Financial Health Score: D

Explanation:
The company shows persistent net liabilities and negative net current assets over the last three years, indicating financial distress. While it remains active, the balance sheet reveals ongoing working capital deficiencies and accumulated losses. This score reflects a need for urgent remedial action to restore financial health.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	2022 (£)	Interpretation
Current Assets	8,856	17,473	17,473	Cash and short-term assets have decreased by ~50%, suggesting tightening liquidity.
Current Liabilities	24,643	58,165	58,165	Current debts have reduced substantially but still exceed current assets.
Net Current Assets (Working Capital)	-15,787	-40,692	-40,692	Negative, indicating inability to cover short-term debts with liquid assets.
Net Assets (Shareholders' Funds)	-15,787	-40,692	-40,692	Negative equity shows accumulated losses exceeding capital injection.
Share Capital	100	100	100	Minimal initial investment, insufficient to absorb losses.

Interpretation of Vital Signs:

• Negative Net Current Assets (working capital) is a "symptom of distress" showing the company may struggle to meet short-term financial obligations without additional financing or operational improvements.
• Negative Net Assets (shareholders' deficit) reflects accumulated losses, undermining the company's solvency and indicating erosion of owner equity.
• The reduction in current liabilities from 2023 to 2024 is positive, yet liabilities still significantly outstrip assets.

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3. Diagnosis

LOVE YOU A LATTE LTD is exhibiting "chronic financial illness" characterized by persistent working capital deficits and negative net worth since incorporation in 2021. The company operates in a challenging segment (licensed restaurants) often requiring strong cash flow management to survive.

• The worsening balance sheet in early years (2022, 2023) suggests the business faced operational or market challenges causing losses to accumulate.
• The slight improvement in 2024 (lower current liabilities and less negative net assets) may indicate early signs of recovery or restructuring efforts but the financial foundation remains fragile.
• The absence of fixed assets data suggests limited tangible asset base, potentially reducing collateral for funding.
• The micro-entity status means accounts are simplified; however, the "symptoms" of financial stress are clear without detailed profit and loss data.

Overall, the company is in a financially vulnerable state, with symptoms akin to a patient with "chronic fatigue" needing immediate intervention to avoid worsening or insolvency.

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4. Recommendations

To restore financial wellness, LOVE YOU A LATTE LTD should consider the following actions:

• Improve Liquidity Management:
  Implement tighter control on cash flow, accelerate receivables, and negotiate extended payment terms with suppliers to improve working capital.

• Capital Injection:
  Consider new equity investment or director loans to boost net assets and provide a buffer against liabilities.

• Cost Reduction and Operational Efficiency:
  Review overheads and operating expenses carefully; optimize staffing and supplier contracts to reduce losses.

• Financial Restructuring:
  Explore refinancing or debt restructuring options to reduce current liabilities and spread repayment obligations.

• Regular Financial Monitoring:
  Adopt monthly financial reviews and forecasting to detect early signs of financial distress and act promptly.

• Seek Professional Advice:
  Engage financial advisors or turnaround specialists to assist with restructuring and strategic planning.

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