ZM AESTHETICS & BEAUTY LTD

Executive Summary

ZM AESTHETICS & BEAUTY LTD, as a newly formed company, currently shows signs of financial strain with negative working capital and net liabilities, indicating an inability to cover short-term debts from assets. Immediate actions focused on improving cash flow, managing liabilities, and potentially injecting capital are essential to stabilize its financial health and ensure sustainable growth.

ZM AESTHETICS & BEAUTY LTD - Analysis Report

Company Number: 15411512

Analysis Date: 2025-07-29 20:02 UTC

Financial Health Assessment for ZM AESTHETICS & BEAUTY LTD

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1. Financial Health Score: D

Explanation:
Given that the company has net liabilities and negative working capital shortly after incorporation, it signals early signs of financial distress. While this is not uncommon for a startup, the negative equity and liquidity shortfall are symptoms that require careful monitoring and prompt action to avoid more serious financial health deterioration.

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2. Key Vital Signs (Core Financial Metrics):

Metric	Value (£)	Interpretation
Current Assets	6,417	Cash + stock available to meet short-term debts
Cash	2,217	Immediate liquidity available
Current Liabilities	15,204	Short-term obligations due within one year
Net Current Assets (Working Capital)	-8,787	Deficit indicates inability to cover current liabilities
Net Assets (Equity)	-7,612	Negative net worth implies liabilities exceed assets
Shareholders' Funds	-7,712	Reflects accumulated losses or capital deficiency
Tangible Fixed Assets	1,451	Long-term assets backing operations
Stock	4,200	Inventory held

Interpretation:

• The negative working capital (-£8,787) is a key symptom of liquidity stress, indicating the company currently cannot cover its short-term debts with current assets.
• The negative net assets (-£7,612) reflect that total liabilities exceed total assets, which is a critical warning sign, often described as "balance sheet weakness."
• The company holds only £2,217 in cash, a small buffer, which may not be sufficient to meet upcoming payments.
• The company is newly incorporated (Jan 2024) and has been operational for less than a year, so some early losses or capital investments are expected but the extent of negative equity is a concern.
• The small number of employees (2) and relatively low fixed asset base suggest a small-scale operation but with high short-term liabilities.

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3. Diagnosis: Overall Financial Condition

ZM AESTHETICS & BEAUTY LTD is currently in the early startup phase, which often involves initial operating losses and investment in stock and fixed assets. However, the company exhibits symptoms of financial distress:

• Liquidity strain demonstrated by negative working capital indicates that the company may struggle to meet short-term obligations without additional financing or improved cash flow.
• Balance sheet weakness with net liabilities indicates the company is currently “underwater,” meaning its debts exceed its assets, which can limit access to credit and undermine stakeholder confidence.
• The presence of stock (£4,200) is positive but its liquidity depends on how quickly it can be sold.
• The directors have declared going concern basis, suggesting confidence in future operations, but the current financial "vital signs" are fragile.

In medical terms, the company’s financial "heartbeat" is weak, showing early signs that if left unaddressed, could lead to more severe conditions such as insolvency.

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4. Recommendations: Specific Actions to Improve Financial Wellness

1. Improve Cash Flow & Liquidity:

   • Accelerate cash inflows by improving sales and collection processes.
   • Negotiate extended payment terms with suppliers to ease short-term cash pressure.
   • Consider short-term financing options to cover immediate liabilities, such as a business overdraft or loan.

2. Reduce Current Liabilities:

   • Review and prioritize payment schedules to reduce current liabilities.
   • Assess if any liabilities can be converted into longer-term debt to improve working capital.

3. Optimize Inventory Management:

   • Evaluate stock turnover to ensure inventory is not tying up excessive cash.
   • Implement just-in-time stock policies where feasible to reduce holding costs.

4. Capital Injection:

   • Directors or investors may need to inject additional equity capital to restore net asset position and provide a financial cushion.

5. Cost Control & Profitability:

   • Monitor expenses closely to reduce overheads without compromising growth.
   • Focus on profitable revenue streams to build retained earnings and improve shareholders' funds.

6. Frequent Financial Monitoring:

   • Establish monthly financial reviews to monitor liquidity, working capital, and profitability closely.
   • Early detection of worsening symptoms allows for timely interventions.

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