ACTIVE RAINBOW LTD

Executive Summary

ACTIVE RAINBOW LTD shows a stable financial condition with positive working capital and controlled liabilities, typical of a micro-entity in the fitness and social care industry. However, a decline in current assets and shareholders' funds suggests the need for improved cash flow and profitability management. With focused financial discipline and strategic planning, the company can maintain and enhance its financial wellness moving forward.

ACTIVE RAINBOW LTD - Analysis Report

Company Number: 13155678

Analysis Date: 2025-07-29 21:00 UTC

Financial Health Assessment: ACTIVE RAINBOW LTD (as of 31 January 2025)

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1. Financial Health Score: B

Explanation:
ACTIVE RAINBOW LTD demonstrates generally sound financial health with solid shareholders' equity and manageable liabilities. The company shows signs of stable operations but also some cautionary signals regarding liquidity and asset management that prevent a top grade.

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2. Key Vital Signs

Metric	2025 Value	Interpretation
Fixed Assets	£1,075	Small increase reflecting minimal investment in long-term assets; healthy for a micro entity.
Current Assets	£8,701	Declined from prior year; indicates reduced short-term resources available.
Current Liabilities	£849	Significant reduction from £3,258 previous year, easing short-term debt pressure.
Net Current Assets	£7,852	(Current Assets - Current Liabilities) Healthy positive working capital indicating liquidity buffer.
Shareholders' Funds	£9,645	Equity capital remains strong, though decreased from £11,255 last year, signaling some retained earnings erosion or distributions.
Cash	Not separately disclosed for 2025	Last year £5,198; cash position unknown but current assets drop suggests possible cash tightening.
Average Employees	1	Very small workforce consistent with micro-entity status; low fixed overheads.

Interpretation of Vital Signs:

• Liquidity ("Healthy Cash Flow"): The company maintains positive net current assets, a key indicator of the ability to meet short-term obligations without distress.
• Asset Management: Fixed assets are minimal and slightly increased, appropriate for a small-scale business in fitness and social work sectors.
• Equity Base: Shareholders' funds have decreased moderately, a "symptom" that may reflect operational costs exceeding income or shareholder withdrawals.
• Liabilities: Current liabilities have significantly reduced, which is a positive sign of improved creditor management or repayment.

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3. Diagnosis: Financial Condition Analysis

ACTIVE RAINBOW LTD appears to be in a stable but cautious financial state. The company operates in sectors requiring modest capital investment and has kept liabilities tightly controlled, which is a healthy sign. The reduction in current assets and equity, however, suggests some operational challenges or potential cash flow constraints.

The "symptoms" to monitor include:

• Shrinking current assets which could indicate tightening liquidity if cash reserves are also diminished.
• Decreased shareholders' funds may reflect a net loss or dividend payments, which if persistent could erode the company’s financial resilience.
• The very small employee base and modest fixed assets align with its micro-entity status and niche service operations, limiting exposure but also scale.

No signs of financial distress such as overdue filings, large liabilities, or negative net assets are present. The company is not in liquidation or other insolvency processes.

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4. Recommendations

To improve financial wellness and maintain a "healthy pulse," the company should consider the following actions:

• Enhance Cash Flow Monitoring: Implement tighter cash flow forecasting to avoid liquidity crunches. Consider maintaining a minimum cash reserve as a buffer.
• Review Profitability Drivers: Analyze income and expense trends to identify areas for cost control or revenue enhancement, particularly given the decline in equity.
• Strengthen Working Capital Management: While net current assets are positive, the drop in current assets warrants attention—optimise debtor collections and manage short-term liabilities actively.
• Plan Asset Investments Prudently: Given the low fixed asset base, any equipment or facility investments should be carefully evaluated for return on investment to avoid unnecessary capital strain.
• Maintain Compliance Vigilance: Continue timely submission of accounts and confirmation statements to avoid penalties and maintain good standing.
• Consider Growth Strategies: Explore opportunities to scale operations or diversify services within the fitness and social care sectors to build financial robustness.

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