THE NEW PRIMROSE CAFE LTD

Executive Summary

THE NEW PRIMROSE CAFE LTD shows early-stage financial challenges typical of a start-up in the café sector, with a working capital deficit and negative equity indicating liquidity and capital concerns. Immediate focus on cash flow management, capital strengthening, and cost control is essential to stabilize the business and build a healthier financial foundation. With targeted interventions, the company can improve its financial vitality and support sustainable growth.

THE NEW PRIMROSE CAFE LTD - Analysis Report

Company Number: 15399084

Analysis Date: 2025-07-29 14:55 UTC

Financial Health Assessment for THE NEW PRIMROSE CAFE LTD

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1. Financial Health Score: D

Explanation:
The company currently shows several concerning signs in its financial metrics, notably negative equity and a working capital deficit, which indicate financial distress symptoms. As a newly incorporated micro entity, some early-stage financial challenges are expected, but these warning signs require urgent attention to avoid deeper troubles. Thus, a grade D reflects a fragile financial condition with risks to sustainability in its current state.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	2,169	Cash and short-term assets available to cover immediate liabilities.
Current Liabilities	8,750	Obligations due within one year, significantly higher than current assets.
Net Current Assets (Working Capital)	-6,581	Indicates a working capital deficit; company cannot cover short-term debts with current assets.
Shareholders Funds (Equity)	-6,581	Negative equity suggests accumulated losses or founder’s capital injection less debt.
Average Number of Employees	4	Size of workforce consistent with a micro entity in the café industry.

Interpretation:

• The working capital deficit of £6,581 is a critical symptom of financial stress, akin to a patient whose vital signs indicate insufficient resources to meet immediate demands.
• Negative shareholders’ funds point to the company’s net liabilities exceeding its assets, a red flag of insolvency risk if not addressed.
• Being a newly formed company (incorporated January 2024), these figures may reflect start-up costs and initial investment shortfalls rather than long-term distress; however, the financial "vital signs" are weak and require close monitoring.

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3. Diagnosis

Underlying Business Health:
THE NEW PRIMROSE CAFE LTD is in its infancy stage, operating as an unlicensed restaurant/café with a micro entity classification. The current financial snapshot reveals "symptoms of distress" primarily from a liquidity and capital perspective:

• Liquidity Risk: The company has more short-term liabilities than assets, which means it could struggle to pay suppliers, employees, or creditors on time without securing additional funding or improving cash flow.
• Capital Deficiency: Negative equity implies that the business has not generated profits sufficient to cover liabilities and initial capital investments. This could be due to start-up losses, typical in the hospitality sector’s early months.
• Operational Scale: Employing 4 people suggests modest operational scale, but the financial strain indicates that revenues may not yet be sufficient to sustain operations or cover costs fully.

In medical analogy, the business is in a "critical care" phase where intervention is necessary to avoid further deterioration.

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4. Recommendations

To improve financial wellness and stabilize the business, consider the following:

1. Cash Flow Management:

   • Improve cash inflows by boosting sales through marketing, promotions, or expanding services.
   • Negotiate longer payment terms with suppliers to ease short-term cash pressure.

2. Capital Injection:

   • The director or investors might need to inject additional funds (equity or loans) to strengthen working capital and shore up negative equity.
   • Explore government grants or funding schemes aimed at new hospitality businesses.

3. Cost Control:

   • Review and reduce fixed and variable costs where possible without compromising service quality.
   • Monitor employee hours and optimize scheduling to align with demand.

4. Financial Monitoring:

   • Implement regular financial reviews to track liquidity, profitability, and cash flow.
   • Prepare cash flow forecasts to anticipate and mitigate liquidity crunches.

5. Business Development:

   • Develop a business plan focusing on growth and profitability targets.
   • Consider diversifying offerings or partnerships to increase revenue streams.

6. Professional Advice:

   • Engage with a financial advisor or business mentor specializing in hospitality startups to guide growth and sustainability strategies.

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