Company Number: 13820736

Analysis Date: 2025-07-20 18:25 UTC

Financial Health Assessment Report for TOP CUT BARBER LLANGOLLEN LTD as of 31 December 2023

---

1. Financial Health Score: D

Explanation:
The company shows signs of financial distress primarily due to negative net current assets (working capital) and net liabilities position. While the business is operational and growing its workforce, the balance sheet reveals liquidity challenges that could impede day-to-day operations if not addressed promptly.

---

2. Key Vital Signs

Metric	2023	2022	Interpretation
Current Assets	£744	£946	Low liquid assets, declining
Current Liabilities	£2,000	£1,500	Short-term debts increasing
Net Current Assets (Working Capital)	-£1,256	-£554	Negative and worsening, indicates liquidity strain
Net Assets (Shareholders Funds)	-£1,256	-£554	Negative equity, company owes more than owns
Average Number of Employees	2	1	Business growing in headcount, positive operational sign

Interpretation of Vital Signs:

• Negative Working Capital: The company’s current liabilities exceed its current assets by £1,256 in 2023, worsening from £554 deficit in 2022. This indicates the company may struggle to meet short-term obligations, a classic symptom of cash flow stress.
• Negative Net Assets: Shareholders funds are negative, meaning liabilities exceed assets overall. This is a red flag that the company is technically insolvent on the balance sheet, even if it remains a going concern in practice.
• Growth in Workforce: The increase from 1 to 2 employees suggests some operational expansion or increased service capacity, a positive sign amidst financial strain.

---

3. Diagnosis

The financial "vitals" suggest TOP CUT BARBER LLANGOLLEN LTD is currently experiencing symptoms of financial distress. The negative working capital is the most concerning symptom — it is akin to a patient having insufficient blood flow to vital organs. In business terms, this means the company risks running out of liquid funds to pay bills and suppliers on time.

The negative net assets indicate accumulated losses or liabilities exceeding assets. This can erode creditor confidence and limit access to external finance, trapping the company in a liquidity crunch.

However, the company is still active, with no overdue filings, and expanding its workforce, which indicates that the underlying business operations might be viable if liquidity issues are addressed.

---

4. Recommendations

To improve financial wellness and recover from these symptoms of distress, the company should consider:

• Improve Cash Flow Management:
  Tighten controls on receivables and payables to improve liquidity. Consider speeding up customer payments and negotiating longer payment terms with suppliers.

• Increase Working Capital:
  Explore short-term financing options such as an overdraft facility or invoice financing to boost current assets and cover immediate liabilities.

• Cost Control:
  Review operational expenses carefully to reduce unnecessary costs without hampering service delivery.

• Equity Injection:
  Since the sole director and shareholder controls 75-100% of shares, an injection of capital could improve the balance sheet and restore positive net assets.

• Monitor Financial Performance Closely:
  Regularly review monthly management accounts to detect early signs of cash flow issues and adjust plans proactively.

• Strategic Growth Planning:
  Ensure that any increase in employees or operational scale is accompanied by a sustainable financial plan to avoid excessive strain on resources.

---