THE GOLDEN LOUNGE LTD

Executive Summary

THE GOLDEN LOUNGE LTD is currently experiencing financial distress characterized by negative net assets and increasing working capital deficits, signaling challenges in liquidity and solvency. Immediate action to improve cash flow, optimize working capital, and strengthen equity is critical to restoring financial health and ensuring business continuity.

THE GOLDEN LOUNGE LTD - Analysis Report

Company Number: 13821189

Analysis Date: 2025-07-29 15:04 UTC

Financial Health Assessment: THE GOLDEN LOUNGE LTD

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1. Financial Health Score: D

Explanation:
THE GOLDEN LOUNGE LTD exhibits significant financial distress indicators, notably persistent negative net assets and worsening net current liabilities over the last three years. The company’s capital base is eroding, and its short-term obligations exceed its liquid assets by a wide margin. These "symptoms of distress" suggest challenges in liquidity and solvency, warranting concern and urgent remedial actions.

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2. Key Vital Signs

Metric	2023 (£)	2022 (£)	Interpretation
Fixed Assets	18,298	17,265	Stable; small increase indicating investment or asset retention.
Current Assets	32,726	37,131	Declining; suggests reduced immediate liquidity.
Prepayments & Accrued Income	18,000	0	Increased prepayments may affect cash availability short-term.
Current Liabilities	92,888	66,396	Significantly increased; rising short-term debts or payables.
Net Current Assets	(42,162)	(29,265)	Negative and worsening; indicates working capital deficiency.
Total Assets Less Current Liabilities	(23,864)	(12,000)	Negative; overall liabilities exceed assets indicating insolvency risk.
Net Assets / Shareholders’ Funds	(23,864)	(12,000)	Negative equity; company is technically insolvent on balance sheet.
Average Number of Employees	4	6	Small workforce; reduction may reflect cost-cutting or downsizing.

Interpretation of Vital Signs:

• Negative net current assets ("working capital deficit") signals a "cash flow blockage" symptom: the company does not have enough short-term assets to cover immediate liabilities, risking inability to pay bills on time.
• Increasing current liabilities combined with falling current assets suggests mounting pressure on liquidity.
• Negative net assets means liabilities exceed total assets, putting the company in a "financial anemia" state, potentially limiting access to new financing.
• Reduced employee count may be a reaction to financial strain or lower operational activity.

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3. Diagnosis

THE GOLDEN LOUNGE LTD is in a fragile financial state with clear "symptoms of distress." The company has been consistently reporting negative net assets and a worsening working capital position over the past three years, indicating chronic liquidity and solvency challenges. The increase in current liabilities year-over-year suggests that creditors may be extending less favourable terms or that the company is relying heavily on short-term borrowings or unpaid obligations.

The company's business sector—hospitality (public houses, bars, catering, licensed restaurants)—is typically cash-intensive and sensitive to economic fluctuations. The current financial snapshot shows that the company might be struggling to generate healthy cash flow to meet its debts when due, risking further financial deterioration or potential insolvency if unaddressed.

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4. Recommendations

To improve financial wellness, THE GOLDEN LOUNGE LTD should consider the following:

1. Cash Flow Management:

   • Conduct a detailed cash flow forecast to identify periods of shortfall.
   • Accelerate receivables and negotiate longer payment terms with creditors where possible.
   • Monitor and reduce discretionary expenses strictly.

2. Working Capital Optimization:

   • Reduce inventory and prepayments where feasible to free up cash.
   • Explore options to convert some current liabilities into longer-term debt to ease short-term pressure.

3. Capital Injection:

   • Given negative shareholders’ funds, consider fresh equity investment or shareholder loans to strengthen the balance sheet and rebuild net asset value.

4. Operational Efficiency:

   • Assess the profitability of each business segment (public house, catering, take-away, restaurant) to focus resources on higher-margin activities.
   • Review staffing levels and cost structures to align with revenue realities.

5. Financial Monitoring:

   • Implement regular management accounts and key performance indicator (KPI) tracking to detect financial "symptoms" early and respond promptly.

6. Professional Advice:

   • Engage a financial advisor or restructuring specialist to develop a turnaround plan.
   • Maintain compliance with filing deadlines to avoid penalties and maintain credibility with stakeholders.

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