LUXURY COUNTRY COTTAGES LTD

Executive Summary

LUXURY COUNTRY COTTAGES LTD has a solid fixed asset base but faces critical liquidity challenges and negative equity just one year after incorporation. Immediate action to improve cash flow and renegotiate liabilities is necessary to avoid insolvency risks. With focused financial management, the company can stabilize and leverage its asset base for future growth.

LUXURY COUNTRY COTTAGES LTD - Analysis Report

Company Number: 15104616

Analysis Date: 2025-07-29 16:59 UTC

Financial Health Assessment Report for LUXURY COUNTRY COTTAGES LTD

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1. Financial Health Score: D

Explanation:
The company shows significant financial distress reflected by negative net assets and high liabilities relative to assets. While it possesses valuable fixed assets, its current liabilities far exceed its current assets, indicating liquidity issues. The overall financial condition suggests urgent attention is required to stabilize the business.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	194,752	Healthy long-term asset base, likely property or equipment.
Current Assets	283	Extremely low liquid assets; very limited cash or receivables.
Current Liabilities	120,666	Substantial short-term debts due within one year.
Net Current Assets (Working Capital)	-120,383	Negative working capital; indicates potential cash flow problems.
Total Assets less Current Liabilities	74,369	Positive, showing fixed assets cover short-term liabilities.
Creditors due after 1 year	105,546	Significant long-term liabilities, possibly loans or mortgages.
Net Assets (Equity)	-31,177	Negative shareholders’ funds; company is insolvent on a balance sheet basis.
Employees	2	Small team, consistent with micro-entity classification.

Interpretation:

• The company holds significant fixed assets (likely real estate given the SIC code), but daily liquidity is severely constrained with negligible current assets against large short-term liabilities.
• The large current liabilities compared to tiny current assets suggest symptoms of acute financial stress or "cash flow congestion."
• Negative net assets indicate the company’s liabilities exceed its total assets, a classic sign of insolvency risk.
• The presence of long-term creditors indicates financial leverage, which could be manageable if cash flows improve but currently adds to risk.
• The company is very young (incorporated 2023), so some initial financial instability is expected, but this pattern requires close monitoring.

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3. Diagnosis

Underlying Business Health:
LUXURY COUNTRY COTTAGES LTD appears to be in the early stages of operation with a fixed asset base likely tied to real estate (cottages for letting). However, the financial "symptoms" point to distress: very limited liquid resources and large short-term obligations create a liquidity bottleneck. This is akin to a patient with a healthy skeleton (fixed assets) but critically low blood pressure (cash flow). The negative equity signals a "balance sheet illness," where liabilities overwhelm assets.

The negative net current assets (working capital) is a red flag. It suggests the business may struggle to meet immediate obligations without refinancing or capital injection. The long-term creditors indicate existing debt, which is a risk if revenues or cash flows do not ramp up quickly.

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4. Recommendations

Immediate Actions:

• Improve liquidity: Seek additional working capital through equity injection or short-term financing to relieve pressure on cash flow and avoid defaulting on creditors.
• Review creditor terms: Negotiate extended payment terms with suppliers or lenders to ease current liabilities burden.
• Cash flow management: Implement strict cash flow forecasting and control measures to monitor and conserve cash.
• Revenue focus: Accelerate efforts to generate rental income from cottages or diversify income streams to improve inflows.
• Cost control: Minimize operating expenses and review employee costs given the small team size.
• Long-term financial restructuring: Consider refinancing or restructuring long-term debt to improve solvency metrics.

Monitoring:

• Regularly track liquidity ratios and net asset position to detect improvements or further deterioration.
• Ensure timely filing of accounts and returns to maintain compliance and credibility.
• Engage financial advisors or insolvency practitioners early if cash flow issues persist.

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