SJ CAFE LTD

Executive Summary

SJ CAFE LTD is currently facing financial distress, characterized by negative net assets and working capital deficiencies, reflecting liquidity challenges typical of early-stage businesses undercapitalized for their operating scale. Immediate intervention through capital infusion, debt restructuring, and improved cash management is critical to stabilizing the company’s financial health and ensuring sustainable operations.

SJ CAFE LTD - Analysis Report

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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