SHERRY AFICIONADO LTD

Executive Summary

SHERRY AFICIONADO LTD is experiencing significant financial distress characterized by negative net assets and insufficient liquidity to cover short-term debts. Immediate actions focused on cash flow management, debt restructuring, and capital injection are recommended to stabilize the company’s financial health and avoid insolvency risks. Without intervention, the company’s financial prognosis remains poor.

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Company Analysis

This analysis is opinion only and should not be interpreted as financial advice.

SHERRY AFICIONADO LTD - Analysis Report

Company Number: 13761553

Analysis Date: 2025-07-29 20:42 UTC

Financial Health Assessment of SHERRY AFICIONADO LTD


1. Financial Health Score: D

Explanation:
The company shows persistent negative net asset values (net liabilities) that have worsened over recent years, indicating financial distress. Despite being classified as a micro-entity, its liabilities significantly exceed current assets, signaling a weak financial position. The score reflects concerns about the company’s solvency and ability to meet short-term obligations.


2. Key Vital Signs

Metric 2024 (£) 2023 (£) 2022 (£) 2021 (£) Interpretation
Current Assets 2,084 436 436 888 Very low cash/resources available for day-to-day operations, slight improvement in 2024.
Current Liabilities 34,090 19,776 19,776 5,359 High and increasing short-term debts, a worrying "symptom" of financial strain.
Net Current Assets -32,006 -19,340 -19,340 4,471 Negative working capital, indicating inability to cover short-term debts with current assets—a key indicator of liquidity distress.
Net Assets (Equity) -32,006 -19,340 -19,340 4,471 Negative net worth, indicating shareholders’ funds are eroded and the company is technically insolvent.
Shareholders’ Funds -32,006 -19,340 -19,340 4,471 Mirrors net assets, confirming negative equity situation.

3. Diagnosis

  • Liquidity Crisis (“Healthy cash flow” absent): The company’s current assets are insufficient to cover its current liabilities, with a growing deficit over 3 years. This negative working capital (net current assets) suggests an inability to pay debts as they fall due, a classic "symptom" of cash flow distress.

  • Solvency Concerns: Negative net assets mean liabilities exceed assets, a dangerous financial imbalance. This implies the company is technically insolvent, with shareholders’ equity wiped out and deteriorating over time.

  • Growth and Operational Activity: The company has only one employee and minimal current assets, indicating limited operational scale. The industry sectors (cultural education and tour operator activities) typically require working capital to manage bookings, events, or inventory, which appears weak here.

  • No Audit and Micro-Entity Reporting: Being a micro-entity exempt from audit means limited external scrutiny, increasing the importance of internal controls and financial management.

  • Control and Governance: A single director and sole owner (75-100% control) can lead to centralized decision-making but may also limit diverse oversight and risk mitigation.


4. Recommendations

  • Urgent Cash Flow Management:
    Implement strict cash flow forecasting and cost controls. Explore ways to increase liquid assets—possibly through short-term financing or capital injection—to cover imminent liabilities and avoid default.

  • Debt Restructuring:
    Engage creditors to negotiate payment terms or seek refinancing options to reduce pressure from current liabilities. Avoid accumulation of further short-term debt.

  • Capital Injection or Equity Funding:
    Given the negative equity, additional capital investment from the owner or external investors is vital to restore net asset positivity and improve balance sheet strength.

  • Operational Review:
    Assess business model viability in cultural education and tour operations. Consider scaling back non-profitable activities or diversifying income streams to stabilize revenue.

  • Financial Reporting and Controls:
    Even as a micro-entity, consider enhanced financial reporting and possibly voluntary audit or review to increase confidence among stakeholders and support better financial decision-making.

  • Professional Advice:
    Consult insolvency or restructuring specialists proactively to explore options before financial distress worsens, preventing forced liquidation or administration.


Medical Analogy Summary

SHERRY AFICIONADO LTD currently exhibits clear "symptoms of financial distress" akin to a patient with deteriorating vital signs: negative net assets (akin to a failing organ), worsening liquidity (poor blood circulation), and increasing liabilities ("toxic buildup"). Without immediate intervention (capital infusion, debt management), the company risks a "critical condition" or insolvency.



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