MAGNA CATERING LIMITED

Executive Summary

MAGNA CATERING LIMITED shows signs of financial recovery with improved net assets and reduced liabilities but continues to face liquidity challenges as indicated by negative working capital. The company’s financial health is fair, reflecting cautious progress in stabilizing operations. To strengthen its financial wellness, focused cash flow management, cost control, and possible capital support are recommended to ensure sustainable growth and solvency.

MAGNA CATERING LIMITED - Analysis Report

Company Number: 13893076

Analysis Date: 2025-07-29 14:45 UTC

Financial Health Assessment Report for MAGNA CATERING LIMITED

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1. Financial Health Score: C

Explanation:
The company shows signs of modest improvement in its financial position compared to the previous year but still exhibits key symptoms of financial strain. The net assets have increased, indicating some recovery, but negative working capital persists, which could impair day-to-day liquidity. Overall, the financial health is fair but requires close attention and action to strengthen the business's solvency and liquidity.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	47,399	53,838	Slight decline suggests possible asset disposals or depreciation; indicates investment in long-term resources is stable but not growing.
Current Assets	20,329	19,109	Marginal improvement; reflects short-term resources like cash or receivables.
Current Liabilities	56,454	75,166	Significant reduction, positive sign for short-term debt management and obligations.
Net Current Assets (Working Capital)	-32,475	-52,715	Negative but improving; indicates liquidity pressures but less severe than last year.
Net Assets (Shareholders’ Funds)	14,924	1,123	Marked improvement reflecting retained earnings or capital injections, enhancing solvency.
Average Number of Employees	8	8	Stable workforce size suggests consistent operational scale.

Interpretation of Vital Signs:

• Negative Working Capital ("symptom of distress"): The company’s current liabilities exceed current assets, meaning it may struggle to cover short-term debts from liquid assets. However, the year-on-year reduction in this gap is a positive trend.
• Improved Net Assets ("strengthening backbone"): The rise from £1,123 to £14,924 indicates either accumulated profits or capital contributions, helping to build a buffer against financial shocks.
• Stable Fixed Assets ("steady infrastructure"): Little change here suggests no major investments or disposals; the company maintains its operational base but may need to consider renewal or expansion to support growth.

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3. Diagnosis

MAGNA CATERING LIMITED is currently in a state of cautious recovery. The company is young (established in 2022) and categorized as a micro-entity operating in the event catering sector. Its financial statements show:

• Persistent liquidity challenges as evidenced by negative working capital, which can impair the company's ability to meet short-term obligations without refinancing or operational cash flow improvements.
• However, the reduction in current liabilities and improved net assets indicate management is addressing financial pressures, possibly through better creditor negotiations, cost control, or capital injections.
• The stable number of employees suggests operational continuity without downsizing, which is a positive sign for business stability.
• The absence of audit requirements and the use of micro-entity accounting standards simplify compliance but limit detailed insight into profitability and cash flow.
• No overdue filings or compliance issues detected, indicating good governance practices.

Overall, the company shows "symptoms of cautious recovery" but remains vulnerable to cash flow shocks or unexpected expenses. The "healthy cash flow" required to turn working capital positive has yet to be realized.

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4. Recommendations

To improve MAGNA CATERING LIMITED’s financial wellness and move towards a healthier cash flow and liquidity position, consider the following actions:

• Enhance Cash Flow Management: Prioritize prompt collection of receivables and negotiate extended payment terms with suppliers to improve working capital balance.
• Cost Control and Efficiency: Review operational costs to identify possible savings, especially in overheads and variable costs linked to event catering.
• Capital Injection: Explore options for additional equity or short-term financing to bolster liquidity and support growth initiatives or unexpected costs.
• Asset Utilization Review: Assess fixed assets for potential underutilization or opportunities to liquidate non-essential assets to raise cash.
• Financial Forecasting: Develop rolling cash flow forecasts to anticipate liquidity crunches early and plan accordingly.
• Stakeholder Communication: Maintain transparent communication with shareholders and creditors about financial position and recovery plans to build confidence and support.
• Regular Financial Monitoring: Establish key performance indicators (KPIs) and schedule frequent financial reviews to detect early "symptoms" of distress and act proactively.

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