PAWS TO HOOVES 2 LTD

Executive Summary

PAWS TO HOOVES 2 LTD is currently facing liquidity challenges marked by negative working capital and fluctuating equity, indicating financial distress. Immediate focus on cash flow management and capital strengthening is essential to restore financial health and ensure sustainable operations.

PAWS TO HOOVES 2 LTD - Analysis Report

Company Number: 13165993

Analysis Date: 2025-07-20 12:23 UTC

Financial Health Assessment: PAWS TO HOOVES 2 LTD (as of 31 March 2024)

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1. Financial Health Score: D

Explanation:
This company shows signs of financial distress with consistent negative net assets and net current liabilities in recent years, although there was a brief positive net asset position in 2022. The persistent working capital deficits and negative equity suggest underlying liquidity and solvency challenges. The grade "D" reflects suboptimal financial health with symptoms that require urgent attention to prevent further deterioration.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	2022 (£)	Interpretation
Fixed Assets	2,245	2,641	2,641	Stable but low; limited long-term asset base
Current Assets	12,453	12,953	12,953	Relatively stable short-term assets
Current Liabilities	21,105	20,400	20,400	High short-term obligations
Net Current Assets (Working Capital)	-8,652	-7,447	-7,447	Negative, indicating liquidity strain
Net Assets (Equity)	6,407	-4,806	4,806	Negative equity in 2023, fluctuating
Shareholders’ Funds	6,407	-4,806	4,806	Mirrors net assets; shareholder value unstable
Average Number of Employees	4	4	4	Small workforce, consistent

Interpretation of Vital Signs:

• The negative net current assets (working capital) in 2023 and 2024 indicate "symptoms of distress" in liquidity—meaning the company may struggle to meet short-term obligations with existing liquid resources.
• The net assets show volatility, with negative shareholders’ funds in 2023 indicating insolvency at that point, followed by slight improvement in 2024, but still below a healthy benchmark for a micro business.
• Fixed assets are minimal, indicating a business with low capital intensity, common in retail or specialized store sectors as here.
• The stable employee count suggests operational consistency but does not offset financial strain.

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3. Diagnosis

PAWS TO HOOVES 2 LTD displays "symptoms of financial distress," particularly liquidity challenges, as evidenced by negative working capital for two consecutive years (2023 and 2024). This means the company’s short-term liabilities exceed its short-term assets, which can lead to difficulty in paying suppliers, creditors, or employees on time.

The fluctuating net asset position—with negative equity in 2023—indicates periods where liabilities outweighed total assets, a sign of potential solvency issues. Though the company recovered slightly in 2024, the net assets remain low relative to liabilities, suggesting fragile financial health.

The stable number of employees and consistent fixed assets show operational continuity, but without improved liquidity and equity, the company risks entering deeper financial trouble.

Overall, the company is "unwell" financially, with liquidity as the primary concern and solvency as a secondary worry. Without intervention, these "symptoms" could lead to more severe outcomes such as insolvency or forced restructuring.

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4. Recommendations

To improve financial wellness and move toward a healthier financial state, the company should consider the following actions:

• Strengthen Cash Flow Management:
  Implement tighter control over receivables (debtors) and payables to improve liquidity. Accelerate collection of debts and negotiate longer payment terms with suppliers where possible.

• Review Cost Structure and Operations:
  Analyze operational expenses to identify any non-essential costs that can be reduced or deferred to preserve cash.

• Increase Capital Injection:
  Explore options for additional equity investment or shareholder loans to bolster net assets and provide a buffer against liabilities.

• Inventory and Asset Management:
  Review current assets composition to ensure resources are efficiently used and not tied up unnecessarily in slow-moving stock or low-yield assets.

• Financial Forecasting and Monitoring:
  Establish regular cash flow forecasting and financial health monitoring to catch distress signs early and allow proactive management.

• Seek Professional Advice:
  Engage a financial advisor or insolvency practitioner early if liquidity does not improve, to explore restructuring options and avoid insolvency.

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