Company Number: 14762570

Analysis Date: 2025-07-29 12:35 UTC

Financial Health Assessment: SJ CAFE LTD (Year ended 31 March 2024)

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1. Financial Health Score: D

Explanation:
SJ CAFE LTD displays significant signs of financial distress based on its latest micro-entity accounts. The company has a negative net asset position (-£3,088), indicating that its liabilities exceed its assets. Negative net current assets (-£18,521) suggest cash flow problems and difficulty meeting short-term obligations. This score reflects a condition that requires urgent attention to avoid further deterioration.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	18,766	Reasonable investment in long-term assets for a start-up.
Current Assets	6,040	Limited liquidity; cash/debtors/stocks are low.
Current Liabilities	24,561	High short-term debts relative to assets, a red flag.
Net Current Assets	-18,521	Negative working capital; symptoms of financial strain.
Creditors due after 1 year	3,333	Medium-term liabilities add to financial burden.
Total Net Assets	-3,088	Insolvency symptom: owes more than owns.
Shareholders Funds	-3,088	Equity wiped out; shareholders’ investment is at risk.
Average Number of Employees	6	Small workforce, consistent with micro-entity status.

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3. Diagnosis: Financial Condition Overview

SJ CAFE LTD is a newly incorporated private limited company operating as a licensed restaurant. Its financial "vital signs" reveal symptoms of distress that resemble a patient struggling with systemic issues:

• Negative Net Assets and Shareholders’ Funds: The company’s liabilities exceed its total assets, indicating insolvency on the balance sheet. This condition is akin to a vital organ underperforming — the company’s capital base is weakened, jeopardizing its ability to sustain operations without external support or restructuring.

• Negative Working Capital (Net Current Assets): The company’s current liabilities are four times its current assets. This "cash flow blockage" implies that SJ CAFE LTD may face challenges paying suppliers, staff, and other short-term expenses promptly. It’s a critical symptom that can lead to liquidity crises.

• Low Cash & Liquid Assets: With only £6,040 in current assets, the business has limited buffer to absorb unexpected expenses or downturns.

• New Business Start-Up Phase: Incorporated in March 2023, the company’s financials may partly reflect start-up costs and early investment in fixed assets (£18,766). However, the negative equity position highlights that initial funding has been insufficient to cover operating deficits or debts.

• No Indication of Overdue Filings or Compliance Issues: The company is current with its statutory filings, which is a positive sign for governance and regulatory health.

Overall, these symptoms indicate a fragile financial state that, if untreated, could lead to insolvency or require formal restructuring.

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4. Recommendations: Prescriptions for Financial Wellness

To restore "health" and improve financial stability, SJ CAFE LTD should consider the following actions:

1. Improve Liquidity and Working Capital:

   • Negotiate extended payment terms with suppliers to ease short-term cash flow pressure.
   • Accelerate receivables collection where applicable.
   • Consider a short-term working capital loan or overdraft facility as a buffer.

2. Capital Injection or Debt Restructuring:

   • The current negative net assets suggest the need for fresh equity investment or converting some liabilities into equity.
   • Engage with creditors to restructure debt, potentially converting some into longer-term obligations to reduce immediate strain.

3. Cost Management and Operational Efficiency:

   • Review fixed and variable costs carefully to reduce burn rate.
   • Optimize staffing and inventory management to improve margins.

4. Financial Monitoring:

   • Implement robust cash flow forecasting and regular financial reviews to detect emerging issues early.
   • Consider professional advice on financial restructuring and turnaround strategies.

5. Strategic Planning:

   • Evaluate market positioning and revenue growth strategies to accelerate profitability.
   • Explore alternative revenue streams or partnerships to diversify income.

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