Company Number: 14403177

Analysis Date: 2025-07-20 14:00 UTC

Financial Health Assessment for RACCOLTO LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits significant financial distress symptoms, notably a substantial net current liability position and negative net assets (£251k deficit) within just two years of operation. While the company is still active and filing on time, the balance sheet shows a worrying imbalance between short-term liabilities and assets, indicating a "symptom of distress." The going concern assumption is supported by shareholder backing, but without corrective action, financial health is fragile.

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2. Key Vital Signs

Metric	30 June 2024 Value	Interpretation
Fixed Assets	£41,176	Moderate investment in intangible (trademarks, website) and tangible assets (office equipment).
Current Assets	£60,917	Includes cash (£39,541), stock (£19,797), and debtors (£1,579); low liquidity relative to debts.
Current Liabilities	£353,281	High current liabilities, largely from "other creditors" (£351k), creating liquidity pressure.
Net Current Assets (Working Capital)	-£292,364	Negative working capital; insufficient short-term assets to cover short-term debts.
Net Assets (Equity)	-£251,188	Negative equity; company liabilities exceed assets, indicating financial strain.
Share Capital	£100	Very minimal equity base; company heavily reliant on liabilities or shareholder support.
Average Staff Number	2	Very small workforce, consistent with micro/small enterprise size.
Turnover and Profit/Loss	Not disclosed	No profit/loss data provided; absence of P&L limits insight into operational performance.
Filing Timeliness	On time	No overdue filings; good compliance, which is positive.

Interpretation of Vital Signs:
The company’s "vital signs" resemble a patient with a dangerously low blood pressure: the negative net current assets and negative equity are critical symptoms showing inability to meet short-term obligations from current resources. This imbalance points to potential liquidity and solvency issues if not addressed swiftly.

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3. Diagnosis

RACCOLTO LIMITED is in an early but precarious financial condition. The company’s balance sheet shows:

• Severe liquidity stress: With current liabilities exceeding current assets by nearly £300k, the company may struggle to pay its bills on time without external funding or restructuring.
• Negative equity: The accumulated losses or deficit of over £250k indicate that the company has consumed more resources than it has generated in value, typical of a start-up or a business facing operational hurdles.
• Asset base composed mainly of intangible assets: The bulk of fixed assets are intangible (trademarks and website development), which may have limited immediate cash value if the business needs to liquidate assets.
• Dependence on shareholder support: The directors note the going concern assumption is based on continued shareholder support, which is vital given the current financial strain.
• No audit and limited disclosure of profit/loss: The absence of an audit and profit/loss account limits transparency on operational performance and cash flow generation.

Overall, the company’s financial health is currently unstable with "symptoms of distress" requiring urgent attention to avoid deterioration into insolvency.

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4. Recommendations

To restore financial wellness and improve the company’s prognosis, the following steps are advised:

1. Improve Liquidity Management:

   • Negotiate terms with creditors to delay payments or reduce short-term liabilities.
   • Accelerate collection of receivables and optimize stock levels to release working capital.
   • Consider short-term financing or shareholder loans to bridge liquidity gaps.

2. Strengthen Capital Base:

   • Explore equity injection from existing or new shareholders to restore positive net assets.
   • Review possibility of capital restructuring or debt-to-equity swaps.

3. Enhance Revenue and Profitability:

   • Develop clear revenue-generating strategies to improve cash flow and profitability.
   • Monitor and control operating costs rigorously.

4. Financial Reporting and Monitoring:

   • Prepare and review full profit and loss accounts to understand operational performance.
   • Implement regular financial health checks (akin to routine medical check-ups) to detect early signs of financial stress.

5. Risk Management and Contingency Planning:

   • Prepare contingency plans for worst-case scenarios (e.g., further cash shortfalls).
   • Engage with professional advisors to consider restructuring options if necessary.

Without these corrective measures, the company risks worsening liquidity and solvency, potentially leading to formal insolvency procedures.

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