MAHARAJA ARTS PALACE LTD.

Executive Summary

MAHARAJA ARTS PALACE LTD has demonstrated notable improvement in its financial position over the past year, particularly in reducing liabilities and strengthening equity. However, low cash reserves and significant fluctuations in debtors and inventory suggest liquidity and operational risks remain. Focused cash flow management, inventory control, and receivables monitoring are essential to sustain and enhance financial health going forward.

MAHARAJA ARTS PALACE LTD. - Analysis Report

Company Number: 13586058

Analysis Date: 2025-07-29 15:41 UTC

Financial Health Assessment: MAHARAJA ARTS PALACE LTD

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1. Financial Health Score: C+

Explanation:
The company shows signs of recovery and improvement in its financial position compared to prior years, particularly from 2023 to 2024. However, the volatility in current assets, especially a sharp decrease in debtors and cash, alongside relatively high current liabilities and bank overdrafts in the previous year, indicate some financial stress. While net assets have increased significantly, the company still faces challenges in maintaining consistent cash flow and managing short-term obligations effectively. Hence, a C+ grade reflects cautious optimism with room for improvement.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Current Assets	126,452	431,942	Substantial decline primarily due to a fall in debtors, indicating possible collection issues or changes in sales terms.
Cash at Bank	9,141	16,060	Low cash reserves reveal tight liquidity—"thin blood flow"—which may affect day-to-day operations.
Debtors	38,271	367,348	Sharp drop suggests either improved collections or reduced sales on credit; needs monitoring.
Current Liabilities	36,893	394,584	Greatly reduced liabilities, indicating "relief from pressure" in settling short-term debts.
Net Current Assets (Working Capital)	89,559	37,358	Improvement suggests better short-term financial health and ability to cover immediate debts.
Net Assets (Equity)	83,559	31,358	Positive growth in shareholder funds indicating retained earnings or capital injections improving the "body's strength".
Bank Loans and Overdrafts	0	342,163	Elimination of overdrafts is a very positive sign—improving liquidity and reducing financial distress.
Average Employees	1	2	Downsizing may indicate cost control measures or reduced operational scale.

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3. Diagnosis: Financial Condition Analysis

• Liquidity and Cash Flow:
  The company’s cash reserves are low (£9,141), which signals a "narrow pulse" in liquidity. However, the significant reduction of overdrafts and bank loans since 2023 suggests management has addressed urgent cash flow concerns. The improved net current assets further confirm stronger short-term solvency.

• Receivables Management:
  The drastic drop in trade debtors from £367k to £38k could mean faster collection or a decrease in credit sales. While improved receivables collection is a positive symptom, the sharp change warrants attention to ensure it’s sustainable and not due to loss of sales or stricter credit terms.

• Profitability and Equity Growth:
  The rise in net assets from £31k to £83k indicates the company has strengthened its financial base, likely through retained profits or shareholder support. This "building muscle" is a healthy sign but requires consistent profitability going forward.

• Operational Scale and Staff:
  Reduction in employees from 2 to 1 may reflect efforts to reduce costs or streamline operations. While this can improve efficiency, it may also indicate a contraction or limited capacity for growth.

• Industry Context:
  Operating in the manufacture of jewellery (SIC 32120) typically requires careful inventory and working capital management. Stocks have increased from £48k to £79k, which could be a sign of building inventory for sales growth or potential overstocking risk.

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4. Recommendations: Steps to Improve Financial Wellness

1. Enhance Cash Flow Management:

   • Maintain a healthy cash buffer to avoid liquidity crunches.
   • Consider negotiating better payment terms with customers and suppliers to smooth cash inflows and outflows.

2. Monitor and Manage Inventory:

   • Review stock turnover rates to avoid excess inventory tying up cash ("clogged arteries").
   • Optimize purchasing and sales forecasts to balance supply and demand.

3. Strengthen Receivables Controls:

   • Ensure stringent credit checks and timely collections to prevent buildup of bad debts.
   • Monitor debtor days closely and take early action on overdue accounts.

4. Cost Control and Operational Efficiency:

   • Continue reviewing staffing and overhead expenses to align with operational needs and sales volume.
   • Explore automation or outsourcing opportunities if feasible to reduce fixed costs.

5. Plan for Sustainable Growth:

   • Focus on increasing turnover and profitability to build "financial muscle" and resilience.
   • Consider financial forecasting and budgeting to anticipate future needs and risks.

6. Engage with Financial Advisors:

   • Regular financial health check-ups can help anticipate symptoms of distress before they become critical.
   • Explore options for financing if expansion is planned, ensuring terms do not overstrain liquidity.

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