THE GREAT OUSE LTD

Executive Summary

THE GREAT OUSE LTD is a micro-sized licensed restaurant with a solid financial foundation reflected by positive equity and controlled liabilities. While the working capital is positive, it is tight, indicating the need for careful cash flow management to sustain healthy operations. With prudent financial controls and a focus on liquidity, the company is positioned for stable growth.

THE GREAT OUSE LTD - Analysis Report

Company Number: 15078958

Analysis Date: 2025-07-29 13:32 UTC

Financial Health Assessment for THE GREAT OUSE LTD

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1. Financial Health Score: B

Explanation:
The company shows a generally sound financial position for a micro-entity in its first year of operation. It maintains positive shareholders’ equity and net current assets, indicating a stable foundation. However, the relatively tight working capital margin and modest asset base suggest some caution as it grows.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	19,832	Modest investment in long-term assets, typical for a small licensed restaurant setup.
Current Assets	33,683	Includes cash, inventory, and receivables—vital for day-to-day operations.
Current Liabilities	31,561	Short-term debts and obligations due within a year; close to current asset value, indicating tight liquidity.
Net Current Assets	2,122	(Current Assets - Current Liabilities) Positive but slim working capital buffer.
Shareholders' Funds (Equity)	21,329	Reflects owner’s stake and retained earnings; positive, indicating solvency.
Average Number of Employees	9	Small workforce aligned with micro-size and operational scope.

Interpretation:

• The company’s working capital (net current assets) is positive but marginal (£2,122), signaling a "healthy cash flow" zone but with limited buffer to absorb unexpected expenses or slow receivables.
• The shareholders’ funds indicate the business is effectively financed by the owner’s capital, with no signs of insolvency.
• The fixed assets base is small but appropriate for a licensed restaurant, likely including kitchen equipment and furnishings.
• The absence of audit requirements and reliance on micro-entity provisions reflect the company’s small scale.

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3. Diagnosis

Symptoms Analysis:

• The company, incorporated in August 2023, is in its infancy, completing just over one year to August 2024.
• The small but positive net current assets suggest "early-stage financial resilience" but also "symptoms of tight liquidity," meaning the company should closely monitor cash flow to avoid strain.
• Current liabilities nearly match current assets, indicating the business relies heavily on short-term funding and must maintain disciplined working capital management.
• The 9 employees average aligns with a small licensed restaurant operation, suggesting control over staffing costs.
• Shareholder equity is healthy, implying that the owner has provided sufficient initial funding or retained earnings are positive, supporting solvency and financial stability.
• No overdue filings or compliance issues, which is a good indicator of operational discipline and governance.
• The company’s control is concentrated with a single individual (Mr Abdul Alim), which can be efficient but also concentrates risk in leadership continuity.

Overall Diagnosis:
THE GREAT OUSE LTD is a micro-sized licensed restaurant with a financially stable foundation but currently operates with slim working capital margins. It shows typical characteristics of a start-up in the hospitality industry: positive equity, controlled staff levels, and modest fixed asset investment. The "symptoms" suggest the need for vigilant cash flow management to avoid liquidity distress as it matures.

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4. Recommendations

To improve financial wellness and reduce risk of distress:

1. Enhance Cash Flow Management:

   • Implement regular cash flow forecasting to anticipate and manage liquidity needs.
   • Negotiate payment terms with suppliers and customers to optimize working capital cycles.

2. Build a Cash Reserve:

   • Aim to increase net current assets to provide a stronger buffer against unexpected expenses or downturns.

3. Monitor and Control Costs:

   • Keep a close eye on operating expenses, especially payroll, given the small size, to maintain profitability.

4. Consider Growth and Investment Plans Carefully:

   • Any expansion or capital expenditure should be balanced against liquidity to avoid overextension.

5. Strengthen Corporate Governance:

   • Although currently owner-managed, consider establishing internal controls or advisory support as the business grows to mitigate concentration risk.

6. Prepare for Future Reporting:

   • Maintain thorough accounting records to ensure smooth filing of accounts and returns within deadlines, avoiding penalties.

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