MEBA LTD

Executive Summary

MEBA LTD demonstrates financial strain characterized by negative equity and significant long-term liabilities, despite maintaining positive short-term liquidity. To improve its financial health, the company should focus on strengthening its capital base, restructuring debt, and enhancing profitability to secure a sustainable future.

MEBA LTD - Analysis Report

Company Number: 13258585

Analysis Date: 2025-07-29 14:16 UTC

Financial Health Assessment Report for MEBA LTD
Date of Financial Year End: 31 March 2024
Industry: Licensed and Unlicensed Restaurants and Cafes (SIC 56101, 56102)

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1. Financial Health Score: D

Explanation:
The company exhibits clear symptoms of financial distress, including negative net assets (shareholders' funds) for three consecutive years and a high level of creditors falling due after more than one year relative to total assets. While it maintains positive net current assets (working capital), the overall balance sheet shows a weakened financial position. The low share capital and negative equity indicate vulnerability. This performance places MEBA LTD in a below-average financial health category.

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2. Key Vital Signs: Critical Metrics and Interpretation

Metric	2024 Value (£)	Interpretation
Fixed Assets	87,168	Moderate investment in long-term assets, though declining from prior year (2023: £116,224), may indicate asset disposals or depreciation.
Current Assets	13,152	Low short-term liquidity; slight improvement from prior year (2023: £11,399).
Current Liabilities	(0)*	Not explicitly stated, but net current assets positive at £13,152 indicate current liabilities are covered by current assets.
Creditors due after >1 year	108,685	Substantial long-term debt, reducing net assets and liquidity flexibility.
Net Assets (Shareholders' Funds)	(8,365)	Negative equity signals the company owes more than it owns, a symptom of financial strain.
Average Number of Employees	6	Small workforce consistent with micro entity classification.
Share Capital	4	Very low capital injection, limiting financial buffer.

* Current liabilities not explicitly broken out, but net current assets positive.

Interpretation:

• The company has a healthy short-term liquidity buffer (net current assets positive), yet it is burdened by significant long-term liabilities exceeding total assets, causing negative net equity.
• A declining fixed asset base may reflect asset write-downs or sales to cover debts.
• The very low share capital suggests limited initial funding, increasing reliance on debt financing.
• The small size and micro-entity status imply simpler operations but also limited financial muscle.

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3. Diagnosis: What the Financial Data Reveals About Business Health

Symptoms of Financial Distress:

• Negative net assets for three consecutive years suggest accumulated losses exceeding equity. This can undermine creditor confidence and limit access to further financing.
• High long-term creditors relative to total assets imply the company is highly leveraged, increasing risk if earnings or cash flows falter.
• Declining fixed assets may indicate asset disposals to meet obligations or reduced investment capacity.
• Positive working capital, however, is a bright spot indicating the company can meet short-term liabilities from current assets.

Underlying Causes (likely):

• Operating in a competitive restaurant industry with thin margins, possibly struggling to generate profits sufficient to build equity.
• Heavy reliance on debt financing possibly due to insufficient shareholder funding.
• Potential cash flow pressures given the low current asset base relative to creditors.

Overall Condition:
The financial "pulse" shows a company under strain — while it can still cover day-to-day obligations, the long-term financial structure shows signs of imbalance and risk. Without corrective action, these symptoms may worsen, leading to solvency challenges.

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4. Prognosis and Recommendations: Actions to Improve Financial Wellness

Prognosis:
If current trends persist, the company risks further erosion of equity and increased difficulty in servicing debt, which could eventually lead to insolvency symptoms. However, the positive working capital is a useful foundation to stabilize operations.

Recommended Interventions:

1. Strengthen Equity Base:

   • Consider a capital injection from existing or new shareholders to improve net assets and reduce reliance on debt.
   • Alternatively, convert some long-term debt to equity if creditors are amenable.

2. Debt Restructuring:

   • Engage with creditors to renegotiate terms, possibly extending maturities or reducing interest rates to ease cash flow burdens.
   • Explore government or industry-specific support schemes for hospitality businesses.

3. Improve Profitability and Cash Flows:

   • Review operational costs rigorously to improve margins.
   • Enhance revenue streams via marketing, menu optimization, or diversification.

4. Asset Management:

   • Assess fixed assets for efficiency; consider divesting non-essential assets to improve liquidity but avoid impairing operational capacity.

5. Financial Monitoring:

   • Implement robust cash flow forecasting and tighter credit control to maintain healthy liquidity.
   • Regularly review financial ratios to detect early signs of distress.

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Executive Summary

MEBA LTD shows signs of financial distress with negative net assets and high long-term debt, though it maintains positive short-term liquidity. The business requires urgent strengthening of its equity base and careful management of debt and cash flows to improve financial resilience. Without interventions, the company risks worsening solvency, but with targeted actions, recovery is achievable.