HKB RISK CONSULTING LTD

Executive Summary

HKB Risk Consulting Ltd is currently financially stable with positive net assets and manageable liabilities, but recent declines in current assets and equity signal emerging liquidity pressures. The company should focus on cash flow management, cost control, and leadership stability to maintain financial health and support future growth. With attentive management, the business can recover stronger and more resilient.

HKB RISK CONSULTING LTD - Analysis Report

Company Number: 12719501

Analysis Date: 2025-07-29 18:58 UTC

Financial Health Assessment for HKB RISK CONSULTING LTD

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1. Financial Health Score: B-

The company shows solid net asset levels indicating a reasonable cushion against liabilities, but recent trends in current assets and liabilities suggest some emerging liquidity concerns. The financial condition is stable but requires monitoring and proactive management to avoid future cash flow stress.

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2. Key Vital Signs

Metric	Latest (30/09/2023)	Trend Since 2021	Interpretation
Fixed Assets	£378	Decreased from £859	Minimal investment in long-term assets; typical for consultancy.
Current Assets	£54,706	Sharp decline from ~£196,000	Significant drop in liquid assets; potential cash flow tightening.
Current Liabilities	£3,921	Dramatic decrease from ~£147,700	Reduced short-term debts; positive for liquidity but warrants investigation.
Net Current Assets	£50,986	Declined from ~£107,000	Working capital remains positive but halved; caution advised.
Net Assets / Shareholders’ Funds	£50,314	Declined from ~£107,000	Equity base reduced by over 50%; reflects retained losses or distributions.
Share Capital	£1,200	Stable	Minimal capital injection; typical for micro-entity.
Employees	3	Stable	Small team consistent with company size.

Note: The company uses micro-entity accounting, so detailed profit & loss data is limited, but balance sheet trends provide vital clues.

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3. Diagnosis: Financial Vital Signs & Symptoms

• Healthy Aspects ("Good Pulse"):

  • Positive net current assets indicate the company can cover short-term liabilities, a sign of manageable liquidity.
  • Low current liabilities relative to previous years reduce immediate pressure on cash outflows.
  • Stable employee numbers and small fixed asset base align with a service-focused, consultancy business model.

• Symptoms of Financial Distress or Weakness:

  • Substantial reduction in current assets from over £196k to £54k suggests either asset sales, reduced cash holdings, or lower receivables, which could signal declining revenues or collection delays.
  • Net assets dropping by more than half over two years could indicate accumulated losses or shareholder withdrawals, reducing the financial buffer.
  • Large prior year current liabilities (~£147k) abruptly dropping to under £4k may reflect settlement of debts, but without corresponding asset increases or profit improvements, this may be due to restructuring or one-off events.

• Director Changes:

  • Resignation of a director in October 2024, who held significant control (25-50%), could impact governance and strategic direction, warranting attention.

• Overall Financial Condition:
  The company is currently solvent with a positive equity base and working capital. However, the sharp shrinkage in assets and equity signals underlying operational challenges or strategic changes. This "weak pulse" in key financial metrics suggests the business is stable but vulnerable to shocks without corrective action.

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4. Prognosis

If current trends continue without intervention, the company may face tighter liquidity and diminished capacity to absorb losses. However, the existing positive net assets and low liabilities provide a runway to stabilize operations. Proactive cash flow management and cost control will be crucial to avoid "financial fatigue" and maintain healthy operations.

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5. Recommendations: Prescriptions for Financial Wellness

• Cash Flow Monitoring and Management
  Regularly review cash inflows and outflows to ensure sufficient liquidity. Consider setting up cash flow forecasts to anticipate shortfalls early.

• Enhance Revenue Collection Processes
  Given the drop in current assets, tighten debtor management to accelerate collections and improve cash reserves.

• Cost Control and Expense Review
  Analyze operating expenses to identify savings opportunities without compromising service quality.

• Equity and Capital Strategy
  Consider modest capital injections or retaining profits to rebuild shareholders’ funds and strengthen the financial buffer.

• Governance and Leadership Stability
  Address the recent director resignation by ensuring strong leadership continuity and clear strategic direction.

• Regular Financial Health Checks
  Implement periodic reviews of key financial ratios (liquidity, solvency, profitability) to detect early warning signs and take corrective actions promptly.

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Explanation of Key Concepts (for clarity):

• Net Current Assets (Working Capital): The "cash in the wallet" after paying short-term bills; positive working capital means the company can meet immediate obligations.
• Net Assets / Shareholders’ Funds: The company’s "financial heart" or net worth; a buffer against losses.
• Fixed Assets: Long-term "body parts" like equipment or property; low levels typical for consulting firms.
• Liquidity: The ability to convert assets into cash quickly; crucial for keeping the business "breathing" day-to-day.

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