PERFUMER DREAMS LIMITED

Executive Summary

Perfumer Dreams Limited currently exhibits significant financial distress, with negative working capital and net liabilities indicating insolvency risks. The company relies heavily on director loans and has minimal cash reserves, signaling liquidity issues. Immediate steps to improve cash flow, restructure capital, and boost revenue are essential for restoring financial health and ensuring long-term viability.

PERFUMER DREAMS LIMITED - Analysis Report

Company Number: 14162348

Analysis Date: 2025-07-20 16:35 UTC

Financial Health Assessment for Perfumer Dreams Limited
Assessment Date: Financial year ended 30 June 2024

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1. Financial Health Score: D

Explanation:
The company's financial health is currently weak, reflected by significant net liabilities, negative working capital, and erosion of shareholders’ funds. While it remains active and compliant with filings, the financial “vital signs” indicate symptoms of financial distress that require urgent attention to avoid worsening liquidity and solvency issues.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Current Assets	£394	Very low cash and liquid assets; minimal buffer for short-term obligations.
Current Liabilities	£7,609	Obligations due within one year; notably higher than current assets.
Net Current Assets (Working Capital)	-£7,215	Negative working capital; company is unable to cover short-term debts with current assets.
Net Assets (Shareholders' Funds)	-£7,215	Net liabilities indicate more debt than assets; company is technically insolvent on balance sheet.
Director’s Loan Account	£7,209	Majority of liabilities are owed to the director, indicating reliance on related party funding.
Number of Employees	1	Very small operation, possibly a sole proprietor setup.

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3. Diagnosis: What the Financial Data Reveals

Perfumer Dreams Limited is showing classic symptoms of financial distress:

• Liquidity Crunch: The company’s cash and other current assets (£394) are drastically insufficient to meet current liabilities (£7,609). This "unhealthy cash flow" situation means the company could struggle to pay bills on time.
• Balance Sheet Insolvency: Net liabilities of £7,215 reflect that total debts exceed total assets, a critical warning sign. The company’s negative equity position signals it is operating "under medical observation" from a financial perspective.
• Reliance on Director Funding: The director’s loan account makes up the bulk of current liabilities. While this may provide short-term relief, it is not a sustainable source of finance if the business cannot generate positive cash flow or profits.
• Early Stage & Small Scale: Incorporated in 2022 and with just one employee, the company is in its infancy and likely still in a development or ramp-up phase. Early losses and negative equity are common in startups but must be addressed promptly.
• No Audit & Small Company Regime: The accounts are unaudited, which is typical for micro or small companies, but this means less external scrutiny on financial controls and health.

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4. Recommendations: Specific Actions to Improve Financial Wellness

1. Improve Cash Flow Management:

   • Prioritize collecting receivables, managing payables, and controlling expenses.
   • Consider short-term financing options (e.g., overdrafts, invoice financing) to ease immediate liquidity pressures.

2. Address Capital Structure:

   • The director’s loan is a key liability; explore options to convert this into equity or secure external investment to strengthen equity and reduce liabilities.
   • Seek additional equity funding or grants targeted at small businesses to improve net asset position.

3. Increase Revenue & Profitability:

   • Review pricing, marketing, and sales strategy to boost turnover, especially given the online retail focus (SIC 47910).
   • Explore partnerships or new product lines to diversify income streams.

4. Regular Financial Monitoring:

   • Implement monthly cash flow forecasts and financial reviews to detect and address symptoms early.
   • Consider professional financial advice to optimize tax and accounting strategies.

5. Contingency Planning:

   • Develop a turnaround plan addressing cost reductions and revenue growth to avoid insolvency risks.
   • Keep thorough records and consider options under insolvency law if financial conditions worsen.

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Medical Analogy Summary

Perfumer Dreams Limited’s financial "vital signs" indicate a company suffering from distress akin to a patient with low blood pressure and dehydration—a warning that immediate resuscitation (cash injections and cost control) is needed to avoid collapse. The company is currently running a "deficit" that erodes its financial health, and without intervention, the prognosis is poor. However, with decisive action on cash flow and capital restructuring, recovery remains possible.

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