NOTES CANDLE CO. LTD

Executive Summary

Notes Candle Co. Ltd is in a fragile financial state characterized by chronic liquidity shortages and negative equity, signaling significant financial distress. Immediate actions such as cash flow management, capital infusion, and strategic business review are crucial to avoid insolvency. Without intervention, the prognosis remains poor, with ongoing risks to operational viability.

NOTES CANDLE CO. LTD - Analysis Report

Company Number: 13254202

Analysis Date: 2025-07-20 12:48 UTC

Financial Health Assessment for NOTES CANDLE CO. LTD

---

1. Financial Health Score: D

Explanation:
The company shows persistent negative net current assets and shareholders' funds over four consecutive years, indicating financial stress. The very limited current assets (£119 in 2024) compared to substantial current liabilities (£15,097) reveal a critical liquidity issue. This score reflects a distressed financial state, requiring urgent attention.

---

2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	119	Extremely low, almost no liquid assets
Current Liabilities	15,097	Significant short-term obligations
Net Current Assets	-14,978	Negative working capital, liquidity is poor
Shareholders’ Funds (Equity)	-14,978	Negative, indicating net liabilities exceed assets
Share Capital	1	Nominal capital, minimal financial buffer

What these signs indicate:

• Negative Working Capital: The company’s current liabilities far exceed its current assets, indicating it may struggle to cover short-term debts as they fall due—a classic symptom of cash flow distress.
• Negative Equity: This suggests accumulated losses or liabilities have eroded the company's net worth, a serious sign of financial weakness.
• Minimal Capital Base: With only £1 share capital, there is virtually no equity cushion to absorb losses or support growth.
• Stable but Poor Position: The figures have remained consistently negative over four years, showing no improvement or recovery.

---

3. Diagnosis

• Liquidity Crisis: The company is in a "critical condition" financially, with symptoms akin to a patient with dangerously low blood pressure—here, cash flow and liquidity are dangerously insufficient to sustain operations without external intervention.
• Solvency Risk: Negative equity signals that the company’s total liabilities exceed its total assets, analogous to an organ failing to function properly under strain. This situation risks insolvency if not remedied.
• Dormant Activity Status: Categorized with SIC code 99999 (Dormant Company), yet the company remains active, indicating minimal or no trading activity; this could be a strategic pause or a precursor to closure.
• Single Director/Shareholder Control: Miss Emma Gorman holds full control and is the sole director, which concentrates decision-making but may also reflect limited management resources.
• Micro-entity Filing: The company benefits from minimal reporting requirements, but this also limits the transparency of operational performance and cash flow dynamics.

---

4. Recommendations

• Immediate Cash Flow Management: Implement a strict cash flow forecast and control system to monitor liabilities and ensure the company can meet short-term obligations. Consider negotiating with creditors for extended payment terms to ease liquidity pressure.
• Capital Injection: Explore options for additional equity investment or shareholder loans to restore positive net assets and improve solvency. Without strengthening the capital base, the company risks insolvency.
• Business Activity Review: Assess whether the company should resume active trading or, if dormant, consider formal dormancy or dissolution to prevent ongoing liabilities.
• Cost Control: Minimize overhead and discretionary spending to preserve cash resources—this is akin to reducing stressors on a patient to promote recovery.
• Professional Advice: Seek expert advice on restructuring options, including potential refinancing, business model pivot, or controlled closure if recovery is unfeasible.
• Governance and Monitoring: As the sole director and significant controller, Miss Gorman should establish regular financial reviews and consider appointing additional directors or advisors to provide support and oversight.

---

Executive Summary