THE CAKE BUSINESS CLUB LIMITED

Executive Summary

THE CAKE BUSINESS CLUB LIMITED shows a healthy financial profile for a newly established company, with strong liquidity and positive net assets indicating financial stability. The main area for attention is clarification of unusual debtor balances and establishing robust profitability tracking to ensure sustainable growth. With prudent financial management, the company is well-positioned to build a strong financial foundation.

THE CAKE BUSINESS CLUB LIMITED - Analysis Report

Company Number: 15055520

Analysis Date: 2025-07-20 13:29 UTC

Financial Health Assessment for THE CAKE BUSINESS CLUB LIMITED
(Financial Year Ending 31 August 2024)

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1. Financial Health Score: B

Explanation:
The company demonstrates a solid start-up phase with positive net assets and a healthy working capital position. The balance sheet shows no alarming signs of distress, but as a newly incorporated business, the financial history is limited. The “B” grade reflects good initial financial health but acknowledges the need to build stronger financial resilience and profitability over time.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	30,344	Adequate short-term resources to cover liabilities
Cash at Bank	32,034	Healthy liquidity position, positive cash flow
Debtors (Negative)	(1,690)	Negative debtor balance suggests possible prepayments or accounting entries requiring review
Current Liabilities	14,308	Manageable short-term obligations
Net Current Assets	16,036	Positive working capital indicates operational liquidity
Fixed Assets (Tangible)	2,926	Moderate investment in equipment
Total Net Assets	20,161	Positive equity base supports ongoing operations
Long-term Liabilities	1,199	Small long-term obligations, likely finance leases
Shareholders’ Funds	20,161	Reflects owner’s equity; fully funded by retained profits or capital

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3. Diagnosis: What the Numbers Reveal

• Healthy Cash Flow and Liquidity: The company holds a healthy cash balance (£32k) relative to its current liabilities (£14k), indicating a good liquidity buffer. This is akin to a patient with a strong pulse and good hydration—ready to meet immediate demands.

• Working Capital Strength: Positive net current assets (£16k) suggest the business can cover short-term debts comfortably, reflecting stable day-to-day financial health.

• Negative Debtors Balance: The negative debtors balance (£-1,690) is unusual and may indicate accounting entries such as prepayments or credit notes. This symptom needs investigation to clarify the company’s cash conversion cycle and receivables management.

• Modest Fixed Asset Base: Tangible assets (£2,926) are limited, typical for a start-up or service-oriented business without heavy capital expenditure. This suggests the company is asset-light, which can be advantageous for flexibility but may limit collateral for borrowing.

• Low Long-term Debt: Small finance lease obligations (£1,199) suggest conservative use of leverage, reducing financial strain and interest burden.

• Equity-Funded: The net assets entirely consist of shareholders’ funds, indicating no accumulated losses or heavy external debt. This is a positive sign of financial stability.

• New Business Phase: Incorporated in August 2023, the company is in its infancy, which naturally limits historical performance data and profitability insights. The absence of profit and loss details limits the diagnosis of operational success or stress.

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4. Recommendations: Steps to Improve Financial Wellness

1. Clarify Debtors Position: Investigate the negative debtor balance to ensure accurate accounting of receivables and prepayments. Accurate debtor management is vital for cash flow health.

2. Develop Profitability Tracking: Establish clear profit and loss monitoring for operational performance assessment. Early identification of revenue streams and cost drivers will support sustainable growth.

3. Maintain Strong Cash Reserves: Continue to build cash reserves to buffer against unexpected expenses—this is akin to maintaining strong vital signs to withstand future shocks.

4. Plan for Growth Investments: Consider strategic investments in fixed assets or working capital aligned with business expansion plans, balancing growth with financial prudence.

5. Monitor Liabilities: Keep long-term liabilities minimal and well-managed to avoid financial distress symptoms like over-leverage.

6. Regular Financial Reviews: Implement periodic financial health check-ups, similar to routine medical exams, to identify emerging risks or opportunities early.

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