Company Number: 12710671

Analysis Date: 2025-07-20 17:08 UTC

Financial Health Assessment Report: PORKY'S TAKE-AWAY LTD

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress reflected in negative net assets and a loss in the latest financial year. Although turnover is stable, increasing liabilities, especially long-term creditors, have overwhelmed the asset base, resulting in a deficit in shareholders’ funds. This grade signals caution and the need for corrective action to avoid worsening financial health.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Turnover	112,805	Stable revenue, little growth from prior year (£111,080).
Profit/(Loss)	(1,988)	Loss reported, worsening from previous period (£(1,317)).
Fixed Assets	9,537	Slight decrease, indicating possible asset disposals or depreciation.
Current Assets	7,758	Slight decrease, mainly cash and stock, limiting liquidity.
Current Liabilities	19,283	Significant increase from £5,876 prior year, indicating rising short-term debts.
Net Current Assets	(11,525)	Negative working capital, signals liquidity strain (current assets less current liabilities).
Total Net Assets	(1,988)	Negative equity, indicating liabilities exceed assets — a symptom of balance sheet weakness.
Staff Costs	28,460	Increased from £17,679, reflecting higher operating expenses.

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3. Diagnosis

Symptoms Analysis:

• Healthy Cash Flow: The company’s turnover is steady, suggesting continued demand for its takeaway services. However, the loss in the profit and loss account and increasing staff costs without revenue growth point to operational inefficiencies or rising expenses.

• Liquidity Strain: A critical symptom is the sharp rise in current liabilities combined with current assets that have not kept pace. The resultant negative net current assets (working capital) suggest the company may struggle to meet short-term obligations promptly.

• Capital Erosion: The most concerning symptom is the shift from positive net assets (£7,574 in 2023) to negative net assets (£-1,988 in 2024). This indicates the company’s liabilities now exceed its assets, a sign of financial distress or capital erosion.

• Rising Long-term Debt: Creditors falling due after more than one year have increased substantially (£19,283 in 2024 from £5,024 in 2023). This increase in long-term liabilities may be masking cash flow problems while increasing financial risk.

• Micro Entity Status: Being a micro entity limits detailed disclosure but also implies a small scale of operations, making it more vulnerable to financial shocks.

Overall Diagnosis:
PORKY’S TAKE-AWAY LTD is showing clear symptoms of financial distress characterized by negative net assets and liquidity pressure. While the business continues generating stable revenue, rising costs and debt levels are undermining financial stability. This scenario is analogous to a patient with a chronic condition that has worsened—immediate intervention is prudent to avoid insolvency risk.

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4. Recommendations

Immediate Actions:

• Improve Cash Flow Management: Tighten control over payables and receivables to improve liquidity. Consider negotiating extended payment terms with creditors.

• Cost Control: Address rising staff costs and other operating expenses. Analyze efficiency and explore cost-saving measures without compromising service quality.

• Debt Restructuring: Engage with creditors to restructure or refinance the longer-term debts to reduce interest burden and avoid liquidity crunch.

• Capital Injection: Consider equity or shareholder funding to restore positive net assets and improve working capital.

• Financial Monitoring: Implement more frequent financial reviews to catch early warning signs and adjust operations swiftly.

Longer-term Strategies:

• Revenue Growth Initiatives: Explore marketing and service diversification to increase turnover beyond current stable but flat levels.

• Asset Management: Review fixed assets for underutilization or disposals to raise cash if necessary.

• Professional Advice: Seek expert financial and operational advice to formulate a turnaround plan and ensure compliance with filing and governance requirements.

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