INV RECRUITMENT LTD
Executive Summary
INV RECRUITMENT LTD remains solvent but faces emerging liquidity pressures, evident from negative working capital and a sharp reduction in net assets. The company's financial health score is C, indicating fair condition but with signs of stress that require immediate management attention. Proactive cash flow management, liability reduction, and equity strengthening are recommended to stabilize and improve financial wellness.
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This analysis is opinion only and should not be interpreted as financial advice.
INV RECRUITMENT LTD - Analysis Report
Financial Health Assessment: INV RECRUITMENT LTD (Year ended 29 February 2024)
1. Financial Health Score: C (Fair Condition with Signs of Stress)
This grade reflects that while the company remains solvent with positive net assets, recent financial indicators reveal emerging distress symptoms that warrant close attention and proactive management.
2. Key Vital Signs: Critical Metrics and Interpretation
Metric | 2024 Value (£) | 2023 Value (£) | Interpretation |
---|---|---|---|
Fixed Assets | 1,062 | 0 | Small investment in fixed assets suggests minimal capital tied up in equipment or property. |
Current Assets | 12,028 | 11,973 | Stable level of liquid assets such as cash or receivables, indicating consistent operational scale. |
Current Liabilities | 12,933 | 8,316 | Significant increase in short-term debts (57% rise) signals growing obligations due within a year. |
Net Current Assets (Working Capital) | -905 | +3,657 | Shift from positive to negative working capital indicates cash flow strain and potential liquidity risk. |
Total Assets Less Current Liabilities | 157 | 3,657 | Net assets have dropped drastically, showing erosion of buffer to cover liabilities. |
Net Assets (Shareholders’ Funds) | 157 | 3,657 | Equity substantially depleted, reflecting accumulated losses or increased liabilities. |
Share Capital | 1 | 1 | Minimal share capital consistent with a micro-entity; no fresh equity injections noted. |
3. Symptoms Analysis: What the Numbers Reveal About Underlying Business Health
Healthy Baseline in Prior Years: From 2020 to 2023, the company maintained positive net current assets and net assets, indicating a generally healthy liquidity position and solvency. Working capital was positive, suggesting smooth day-to-day operations.
Recent Liquidity Stress: The 2024 financial year reveals a sharp increase in current liabilities (+£4,617), outpacing the slight increase in current assets. This imbalance leads to negative working capital (-£905), a classic symptom of cash flow distress. Negative working capital means the company may struggle to meet short-term obligations without refinancing or cash injections.
Net Asset Erosion: The equity base has shrunk from £3,657 to £157, a serious warning sign. This could indicate accrued losses, increased creditor claims, or a write-down of assets. The company is still solvent but now operates with a very thin equity cushion, elevating financial risk.
Dependence on Director Support: The accounts note the company’s going concern status relies on continued support from the director. This is analogous to a patient relying on medication to keep condition stable — without this support, the company might not sustain operations.
Micro-Entity Status & Single Employee: The company is small-scale with limited filing requirements and only one employee (the director). This suggests a lean operation but also limited capacity to absorb financial shocks.
4. Diagnosis: Overall Financial Condition Assessment
INV RECRUITMENT LTD is currently in a cautious financial state. The company’s financial "vital signs" show it is solvent but experiencing early symptoms of liquidity strain due to rising short-term debts exceeding liquid assets. The sharp decline in net assets signals underlying operational or financial challenges that have eroded equity buffers, akin to a patient’s weakened immune system.
The director’s ongoing financial support is currently sustaining the business, but this reliance points to vulnerability if that support lessens. Without intervention, the company risks entering a phase of financial distress, potentially leading to inability to meet creditor demands or forced restructuring.
5. Recommendations: Specific Actions to Improve Financial Wellness
Improve Cash Flow Management: Aggressively monitor and accelerate collections on receivables, and negotiate extended payment terms with suppliers to restore positive working capital.
Reduce Current Liabilities: Prioritize paying down short-term debts to ease liquidity pressure, possibly by restructuring creditor terms or securing short-term financing if necessary.
Strengthen Equity Base: Consider capital injection either by director funding or third-party investment to replenish shareholders’ funds and create a buffer against future shocks.
Operational Efficiency Review: Examine business operations for cost savings or revenue enhancement opportunities to rebuild profitability and retained reserves.
Regular Financial Monitoring: Implement monthly financial reviews to detect early warning signs and respond promptly to changing conditions, avoiding surprises.
Consider Professional Advice: Engage financial advisors or accountants to assist with cash flow forecasting, debt management, and potentially explore grants or support schemes available to micro-entities.
Medical Analogy Summary
INV RECRUITMENT LTD’s financial health is analogous to a patient showing early signs of stress: vital signs like working capital and net assets have weakened, indicating the business "immune system" is compromised. Immediate lifestyle changes (cash flow improvements), medication (director funding or loans), and regular check-ups (financial monitoring) are required to avoid progression to a critical condition.
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