PRUDENS ENGINEERING & CONSULTANCY LTD

Executive Summary

Prudens Engineering & Consultancy Ltd shows significant liquidity and solvency concerns, characterized by persistent negative net current assets, declining equity, and minimal cash reserves. While the company remains compliant with filing requirements, the substantial director’s account balance and eroding financial position warrant careful investigation. Overall, these factors indicate a high risk profile for investors seeking financial stability.

PRUDENS ENGINEERING & CONSULTANCY LTD - Analysis Report

Company Number: 12885384

Analysis Date: 2025-07-29 17:00 UTC

1. Risk Rating: HIGH
   The company exhibits a persistent negative net current asset position over recent years, indicating liquidity challenges. The current liabilities consistently exceed current assets, with a notably low cash balance (£217 in 2024), creating solvency concerns. Net assets and shareholder funds have also eroded from £2,278 in 2020 to only £169 in 2024, signaling weakening financial stability.

2. Key Concerns:

• Liquidity Risk: Negative net current assets for four consecutive years (2021-2024) and minimal cash reserves suggest difficulties in meeting short-term obligations.
• Reliance on Director’s Account: A substantial portion of debtors (£2,820 in 2024) is owed by the director’s account, which may not be readily recoverable, impacting working capital quality.
• Declining Net Assets: Equity has significantly eroded from £2,278 in 2020 to £169 in 2024, reflecting ongoing losses or capital withdrawals that threaten operational sustainability.

3. Positive Indicators:

• Compliance with Filings: No overdue accounts or confirmation statements, indicating regulatory compliance and governance diligence.
• Stable Employee Base: The company maintains a consistent workforce (average of 1 employee), which may reflect controlled operational costs.
• Intangible Asset Consistency: Goodwill remains stable and is amortized systematically over a 5-year period, showing consistent accounting treatment.

4. Due Diligence Notes:

• Investigate the nature and recoverability of the director’s account balance classified as debtors to assess liquidity risk accurately.
• Review underlying causes for the decline in net assets and persistent negative working capital to understand operational profitability and cash flow management.
• Assess the company’s ability to generate sustainable revenue and cash flows given the low cash reserves and increasing current liabilities.
• Confirm if any contingent liabilities or off-balance-sheet obligations exist that may exacerbate financial risk.