PRM (2022) LIMITED

Executive Summary

PRM (2022) LIMITED’s financial health has deteriorated in the latest year, marked by a sharp decline in cash reserves and a negative working capital position, signaling liquidity distress. The equity base has also eroded significantly, indicating weakened financial resilience. Immediate focus on cash management and expense control is critical to restore stability and ensure the company’s financial wellness going forward.

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Company Analysis

This analysis is opinion only and should not be interpreted as financial advice.

PRM (2022) LIMITED - Analysis Report

Company Number: 13843081

Analysis Date: 2025-07-29 18:01 UTC

Financial Health Assessment for PRM (2022) LIMITED


1. Financial Health Score: C

Explanation:
The company exhibits signs of financial stress in the most recent year, with a notable deterioration in liquidity and working capital position. While the company showed healthy net current assets and equity in prior years, the latest financial year reveals a negative net current asset position and a significant drop in cash reserves. This indicates symptoms of liquidity strain and potential short-term financial distress, warranting caution and remedial action.


2. Key Vital Signs

Metric 2025 (£) 2024 (£) Interpretation
Current Assets 32,366 86,993 Sharp decline, indicating reduced liquid resources.
Cash at Bank 2,991 56,993 Critical drop in cash reserves; "weak pulse" in liquidity.
Debtors 29,375 30,000 Relatively stable; receivables not a major concern.
Current Liabilities 47,969 49,093 Slight improvement but still large relative to assets.
Net Current Assets -15,603 37,900 Negative working capital; "symptom of distress" in short-term financial health.
Total Assets Less Current Liabilities 8,125 67,729 Significant decline; equity base weakened.
Shareholders’ Funds (Equity) 8,125 67,729 Drastic reduction, signaling erosion of financial buffer.
Tangible Fixed Assets 23,728 29,829 Moderate asset base; some depreciation noted.

Additional Observations:

  • The company maintains modest tangible assets but these are declining due to depreciation exceeding additions.
  • The accounts are unaudited but prepared under small company regime standards.
  • Directors are experienced and hold balanced control.
  • The company operates in management consultancy, a sector typically reliant on human capital and service contracts rather than heavy fixed assets.

3. Diagnosis: What the Numbers Reveal About Business Health

PRM (2022) LIMITED has experienced a sharp deterioration in liquidity and working capital during the latest financial year ending 31 January 2025. The "healthy cash flow" seen in previous years (2022-2024) has weakened considerably, with cash reserves dropping from nearly £57k to under £3k. This is a critical "vital sign" indicating cash flow constraints, which could impair the company’s ability to meet short-term obligations.

The negative net current assets (-£15,603) is a clear "symptom of distress," suggesting that current liabilities exceed current assets, putting pressure on operational liquidity. Despite the current liabilities remaining stable, the reduction in current assets, particularly cash, signals potential difficulties in financing day-to-day activities.

The sharp fall in shareholders' funds from £67,729 to £8,125 highlights a substantial erosion of equity and financial resilience. This could be due to losses incurred or distributions exceeding profits, although profit and loss details are not disclosed. The decline in tangible fixed assets, due to depreciation exceeding additions, is not unusual but adds to the reduced asset base.

In sum, the company appears to be in a weakened financial state, with liquidity and equity cushions significantly reduced. While not insolvent, it is showing early "symptoms" that could lead to financial distress if not addressed promptly.


4. Recommendations: Actions to Improve Financial Wellness

Short-term (Immediate Attention):

  • Improve Cash Management: Focus on boosting cash reserves by accelerating debtor collections, possibly negotiating better payment terms with clients or factoring receivables to generate immediate cash.
  • Review and Control Expenses: Tighten spending, especially non-essential costs, to conserve cash.
  • Engage with Creditors: Negotiate extended payment terms or restructuring of current liabilities to ease immediate cash flow pressure.

Medium-term (Stabilization):

  • Profitability Analysis: Investigate causes of equity erosion; improve pricing, service delivery efficiency, or diversify client base to restore profitability.
  • Strengthen Working Capital: Aim to restore positive net current assets by balancing current asset growth and liability control.
  • Asset Utilization: Review fixed assets for possible disposals or more efficient use to release cash or reduce depreciation impact.

Long-term (Sustainable Health):

  • Financial Planning: Develop detailed cash flow forecasts and budgets to anticipate and manage liquidity challenges.
  • Capital Injection: Consider equity funding or shareholder loans to strengthen the balance sheet if operational improvements are insufficient.
  • Risk Monitoring: Regularly track vital signs (cash, working capital, equity) to detect early warning signals.

Medical Analogy Summary

PRM (2022) LIMITED’s financial "pulse" has weakened sharply over the last year, with "healthy cash flow" turning into a "symptom of distress" as liquidity and equity reserves decline. Without intervention to stabilize cash and shore up working capital, the company risks entering a state of financial "illness" that could escalate. Prompt diagnostic "treatment" through improved cash management and cost control is essential to restore balance and avoid financial "organ failure."



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