WEST COAST SEAWEED LTD

Executive Summary

WEST COAST SEAWEED LTD is currently experiencing financial distress characterized by negative equity, declining liquidity, and rising liabilities. The company’s recent asset investments have not translated into improved short-term financial health, leading to a fragile balance sheet. Immediate focus on cash flow management, cost control, and strengthening capital structure is essential to stabilize and improve the company’s financial wellbeing.

WEST COAST SEAWEED LTD - Analysis Report

Company Number: SC695589

Analysis Date: 2025-07-29 19:36 UTC

Financial Health Assessment of WEST COAST SEAWEED LTD

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1. Financial Health Score: D

Explanation:
The company shows serious signs of financial distress, primarily due to negative net assets and increasing long-term liabilities. While the micro-entity size limits complexity, the worsening balance sheet position and low liquidity metrics indicate a fragile financial state.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	19,850	0	Investment in long-term assets - positive sign of growth.
Current Assets	2,577	8,401	Sharp decrease in short-term resources (cash, receivables).
Current Liabilities	29,650	9,998	Significant increase in short-term debts - risk factor.
Net Current Assets (Working Capital)	(27,073)	(1,597)	Negative working capital signals liquidity problems.
Total Net Assets (Equity)	(7,223)	(1,597)	Negative equity implies the company owes more than owns.
Share Capital	2	2	Nominal capital, limited buffer for absorbing losses.
Employees	0	0	No staff - may indicate early-stage or asset-heavy model.

Interpretation of Vital Signs:

• The large jump in fixed assets (£19,850) suggests recent capital investment, possibly in equipment or infrastructure related to marine aquaculture.
• Current assets dropped dramatically, particularly cash, which is a symptom of cash flow strain ("weak pulse").
• Current liabilities almost tripled, indicating increased short-term obligations that may pressure liquidity ("symptom of financial distress").
• Negative net current assets (working capital) signals difficulty meeting short-term obligations without raising additional funds or selling assets.
• Negative net assets (shareholders' funds) is a critical warning sign of insolvency risk or accumulated losses.

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3. Diagnosis

Underlying Business Health:
WEST COAST SEAWEED LTD is a micro-entity operating in marine aquaculture, a capital-intensive sector evidenced by recent fixed asset acquisition. Despite the investment, the company’s balance sheet reveals significant liquidity and solvency challenges. The sharp rise in current liabilities, coupled with declining current assets, points to strained cash flow and potential difficulties in meeting short-term debts.

The negative shareholders’ funds indicate that cumulative losses or liabilities exceed total assets, a classic symptom of financial distress. The absence of employees suggests a possibly asset-centric or outsourcing business model but also limits operational flexibility.

While the directors’ reports and audit exemption are in line with micro-entity regulations, the financial "vital signs" suggest the company is currently under financial strain and may face challenges sustaining operations without improved cash flow or additional financing.

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4. Recommendations

Immediate Actions to Improve Financial Wellness:

• Enhance Liquidity: Develop a cash flow management plan to improve working capital. Consider negotiating extended payment terms with creditors or accelerating receivables collection.
• Review Cost Structure: Evaluate operational expenses and fixed asset utilization to identify cost-saving opportunities.
• Seek Additional Capital: Given the negative equity, explore options for capital injection from shareholders or external investors to strengthen the balance sheet "immune system."
• Debt Restructuring: Engage with creditors to restructure short-term liabilities, potentially converting some to longer-term debts to ease immediate cash pressure.
• Business Model Review: Assess the asset-heavy approach to ensure it aligns with market demand and revenue generation, as overinvestment without corresponding income is a risk factor.
• Regular Financial Monitoring: Implement frequent financial health check-ups with updated forecasts to spot symptoms of distress early and respond proactively.

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