NEW WORLD CHEN LIMITED

Executive Summary

NEW WORLD CHEN LIMITED is currently in a financially distressed state with negative net assets and working capital deficits indicating liquidity challenges. The company's financial "vital signs" reveal increasing liabilities and erosion of shareholder funds, necessitating urgent actions to improve cash flow, control costs, and explore capital infusion. Prompt management intervention is crucial to stabilize and improve the company's financial health.

NEW WORLD CHEN LIMITED - Analysis Report

Company Number: SC698722

Analysis Date: 2025-07-20 14:01 UTC

Financial Health Assessment for NEW WORLD CHEN LIMITED

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1. Financial Health Score: D

Explanation:
The company is currently experiencing significant financial distress, indicated by persistent and increasing net liabilities, negative working capital, and erosion of shareholder funds over the last three years. The financial "vital signs" reveal symptoms of cash flow strain and solvency challenges, placing the company in a vulnerable position.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	629	797	Minimal investment in long-term assets; stable but low asset base.
Current Assets	8,316	3,966	Short-term assets increased, positive sign but insufficient to cover liabilities.
Current Liabilities	12,717	6,534	Significant increase showing growing short-term obligations.
Net Current Assets (Working Capital)	-4,084	-2,264	Negative, indicating liquidity distress—company may struggle to meet short-term debts.
Total Assets Less Current Liabilities	-3,455	-1,467	Negative, suggests overall asset base does not cover current liabilities.
Net Assets / Shareholders’ Funds	-6,017	-3,083	Substantial negative equity indicating accumulated losses and possible insolvency risks.
Share Capital	1.00	1.00	Nominal share capital; minimal buffer against losses.

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3. Diagnosis

The financial statements show a company exhibiting clear "symptoms of distress." Over the past three years, NEW WORLD CHEN LIMITED has seen a steady deterioration in net assets from a positive £398 in 2021 to a negative £6,017 in 2024. The negative working capital highlights liquidity challenges, meaning the company does not have enough short-term assets (like cash or receivables) to comfortably cover its short-term liabilities (like bills, loans, and payables).

The rise in current liabilities alongside an insufficient increase in current assets suggests increasing pressure on cash flows. With net liabilities escalating, the business is likely relying on external funding or director loans to sustain operations. This financial position may limit the company's ability to invest, grow, or withstand economic shocks.

Despite being a micro-entity with minimal fixed assets and a small team (average 3 employees), the persistent losses and negative equity indicate underlying operational or market challenges. The take-away food industry (SIC 56103) is competitive with tight margins, and the company may be struggling with cost control, revenue generation, or both.

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4. Recommendations

To improve financial wellness and avoid further deterioration, the company should consider the following actions:

• Cash Flow Management:
  Prioritize improving liquidity by tightening credit terms, reducing stock levels, and accelerating receivables collection. Avoid unnecessary expenses to preserve cash.

• Cost Control and Efficiency:
  Conduct a detailed review of operational costs. Identify areas for cost reduction without compromising quality or service.

• Revenue Enhancement:
  Explore strategies to increase sales, such as targeted marketing, menu innovation, or expanding delivery options. Consider partnerships or promotions to boost customer base.

• Capital Injection:
  Assess options for new equity investment or loans to strengthen the balance sheet and provide working capital. Engage with investors or lenders proactively.

• Financial Monitoring:
  Implement regular financial reviews with clear KPIs to detect early signs of distress and respond timely.

• Professional Advice:
  Seek expert financial and business advisory support to develop a turnaround plan. Early intervention is crucial to prevent insolvency risks.

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Medical Analogy Summary:

Like a patient showing symptoms of chronic fatigue and declining vital signs, NEW WORLD CHEN LIMITED’s financial health is weak with negative equity and liquidity issues acting as warning signs. Immediate "treatment" through cash flow management, cost control, and possible capital support is essential to restore "financial vitality" and prevent "organ failure" (insolvency).

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