Company Number: 14375528

Analysis Date: 2025-07-29 16:43 UTC

Financial Health Assessment for OLIVE AND RUBY LIMITED
Date of Financial Year End: 26 March 2024

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1. Financial Health Score: B+

Explanation:
OLIVE AND RUBY LIMITED presents a solid financial position for a relatively young company (incorporated September 2022). The company demonstrates a healthy balance sheet with strong net assets and positive working capital. The presence of significant goodwill reflects an acquisition or business combination, which may entail risks if not well integrated but also signals strategic growth. Some caution is warranted due to the relatively high long-term liabilities, but overall, the company's financial "vital signs" show good stability and resilience.

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2. Key Vital Signs

Metric	Value	Interpretation
Fixed Assets	£504,213	Significant investment in intangible (goodwill) and tangible assets indicates a solid asset base.
Current Assets	£313,529	Healthy level of liquid and short-term assets to meet immediate obligations.
Cash	£161,492	Strong cash position suggests good liquidity and ability to fund operations.
Debtors	£118,731	Moderate trade receivables; manageable but requires collection monitoring.
Current Liabilities	£123,679	Short-term debts are covered by current assets, indicating good short-term financial health.
Net Current Assets	£189,850	Positive working capital, a key sign of operational "vitality" and liquidity.
Long-term Liabilities	£143,433	Moderate long-term obligations; manageable but should be monitored for servicing capacity.
Net Assets / Shareholders Funds	£545,860	Strong equity base; shareholders' funds substantially exceed share capital, indicating retained earnings or capital reserves.
Share Capital	£500	Minimal nominal capital; majority funding via share premium and reserves.
Employees	9	Small workforce consistent with small company status and controlled operations.

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3. Diagnosis

• Asset Health: The company’s fixed assets are predominantly goodwill (£485k), with a modest amount of tangible assets (£19k). Goodwill reflects the premium paid over net assets during business acquisition and is amortised over 15 years. This "intangible pulse" must be monitored for impairment, as goodwill impairment can indicate business distress. Currently, no impairment has been recorded, which is a positive sign.

• Liquidity & Cash Flow: With cash balances of £161,492 and net current assets of nearly £190,000, OLIVE AND RUBY shows "healthy cash flow" potential and the ability to cover short-term liabilities. Positive working capital is a strong symptom of operational health.

• Leverage & Solvency: Long-term liabilities of £143,433 are moderate relative to net assets. The company’s equity cushion (£545,860) is robust, with shareholders’ funds well exceeding liabilities. This indicates a solid solvency position; the company’s financial "heart" is strong enough to support debts.

• Profit Retention: Profit and loss reserves stand at £45,360, showing the company has retained some earnings since incorporation and commencement of trade. This is a good symptom of business viability and operational success.

• Business Stage: The company is young (less than 2 years), with trading commencing July 2023, so financial statements cover the first full period of trading plus start-up phase. The extended accounting period and exemption from audit are typical for new small companies but mean less external scrutiny.

• Risk Factors: The company holds a significant amount of goodwill which can be a "hidden risk" if future cash flows from acquisitions do not materialise as expected. Long-term liabilities, while manageable, must be serviced sustainably. The business operates in a specialised retail sector (dispensing chemist), which may face regulatory and market pressures.

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4. Recommendations

1. Monitor Goodwill Impairment: Regularly review the recoverable amount of goodwill to ensure it is not overstated. Early detection of impairment is critical to avoid sudden financial strain.

2. Enhance Debtor Management: With £118,731 in trade debtors, implement strong credit control procedures to maintain cash inflows and prevent liquidity "blockages".

3. Manage Long-term Liabilities: Develop a clear plan for servicing long-term debts to maintain solvency and avoid over-leverage symptoms.

4. Build Profitability and Reserves: Focus on improving operational profitability to increase retained earnings, thereby strengthening financial resilience.

5. Prepare for Audit and Compliance: As the company grows, consider voluntary audit or enhanced financial controls to reassure stakeholders and support future growth.

6. Cash Flow Forecasting: Maintain regular cash flow forecasting to anticipate liquidity needs and prevent cash flow distress.

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