POT AND BUN LTD

Executive Summary

Pot And Bun Ltd shows a fragile financial state characterized by negative working capital but improving net equity. The company has a stable asset base but faces significant liquidity challenges that need urgent attention. Careful cash flow management and cost control are essential to stabilize and improve financial health going forward.

POT AND BUN LTD - Analysis Report

Company Number: 13886997

Analysis Date: 2025-07-20 16:50 UTC

Financial Health Assessment for POT AND BUN LTD

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1. Financial Health Score: C

Explanation:
This company shows mixed financial signals. While the net assets have improved from a negative position last year to a slightly positive figure, there are significant concerns with liquidity and working capital. The financials suggest some recovery but also symptoms of financial strain that require careful management.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	114,472	Stable long-term investment in business infrastructure.
Current Assets	9,694	Very low short-term assets, indicating limited liquid resources.
Current Liabilities	115,726	High short-term debts, creating liquidity pressure.
Net Current Assets	-106,032	Negative working capital — a critical symptom of distress. Indicates difficulty in meeting short-term obligations.
Total Assets Less Current Liabilities	8,440	Slightly positive after subtracting current liabilities. Shows the company's operational assets exceed immediate liabilities by a small margin.
Net Assets	8,440	Positive net worth now, an improvement from previous years' deficits.
Shareholders’ Funds	8,440	Equity has recovered from negative to positive, signaling some turnaround.
Employee Count	3	Very small workforce, consistent with micro-entity status.

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3. Diagnosis

POT AND BUN LTD is a micro-entity operating in the unlicensed restaurants and cafes sector, established in 2022. The company's financial "vital signs" reveal a fragile liquidity condition. The most concerning symptom is the severely negative net current assets (working capital) of over £106k in 2024, compared to a positive working capital last year. This indicates that the company currently owes far more in short-term liabilities than it holds in short-term assets, risking cash flow difficulties and potential challenges in meeting immediate financial obligations.

Despite this, the company’s fixed assets remain substantial and stable, suggesting a solid base of physical or long-term assets (likely equipment or leasehold improvements). The net assets turning positive from a negative position last year is a sign of some financial recovery or revaluation, but the turnaround is fragile.

The small employee base aligns with the micro entity classification but also means limited human resources to manage or expand operations.

Overall, the company exhibits symptoms of financial stress primarily related to liquidity and working capital management, but with a stable asset base and a slight improvement in net equity, the prognosis is cautiously hopeful if corrective actions are taken promptly.

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4. Recommendations

• Improve Liquidity Management:
  Focus on increasing current assets, particularly cash and receivables, and reducing current liabilities. Negotiate with creditors for extended payment terms and accelerate receivable collections.

• Cash Flow Monitoring:
  Implement rigorous cash flow forecasting to anticipate shortfalls and avoid liquidity crises. Consider short-term financing solutions such as overdrafts or invoice financing only if carefully controlled.

• Cost Control and Efficiency:
  Review operating expenses and overheads to ensure they are aligned with revenue generation capacity. With only 3 employees, ensure labour costs are optimized without compromising service quality.

• Asset Utilization:
  Evaluate fixed assets for potential underutilization or opportunities to generate additional income (e.g., subletting space or equipment rental).

• Financial Planning and Reporting:
  Strengthen internal financial controls and reporting to detect early signs of distress. Engage with financial advisors or accountants for regular reviews.

• Explore Growth Opportunities:
  Once liquidity stabilizes, consider targeted marketing or service improvements to increase sales, given the competitive hospitality sector.

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