PURPLEOVEN RECRUITS LTD

Executive Summary

PURPLEOVEN RECRUITS LTD is showing early signs of financial strain with negative working capital and net liabilities, typical for a young micro-entity but requiring prompt attention. The company must urgently improve liquidity, file overdue accounts, and consider capital support to stabilize financial health. Without intervention, the risk of worsening financial distress and regulatory consequences increases.

PURPLEOVEN RECRUITS LTD - Analysis Report

Company Number: 14273818

Analysis Date: 2025-07-29 14:45 UTC

Financial Health Assessment Report for PURPLEOVEN RECRUITS LTD

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1. Financial Health Score: D

Explanation:
The company shows early signs of financial distress with negative net current assets and net liabilities at the end of its first financial period. While this is not uncommon for a newly incorporated business, the negative working capital ("symptom of distress") indicates a liquidity challenge that needs urgent attention. The score reflects a below-average financial health status, with potential risks if corrective action is not taken.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	1,453	Low level of short-term assets to cover immediate debts.
Current Liabilities	1,871	Obligations due within one year exceed current assets.
Net Current Assets	-418	Working capital deficit indicates liquidity risk.
Net Assets (Shareholder Funds)	-418	Negative equity suggests the company is technically insolvent on paper.
Number of Employees	5	Small workforce, typical for a micro entity.
Account Category	Micro	Simplified reporting due to small scale.
Filing Status	Overdue Accounts	Non-compliance risk with Companies House deadlines.

Interpretation:

• Liquidity Vital Sign: The negative net current assets ("unhealthy cash flow") mean the company may struggle to meet short-term obligations without additional funding or improved cash management.
• Solvency Vital Sign: Negative net assets indicate the company’s liabilities exceed its assets, a "symptom of financial strain" that could impair creditor confidence.
• Compliance Vital Sign: Overdue accounts filing is a "red flag" for governance and regulatory adherence, potentially leading to penalties or reputational damage.

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3. Diagnosis

The financial "symptoms" suggest PURPLEOVEN RECRUITS LTD is at an early stage with insufficient capital buffer and working capital constraints. The negative net current assets and net liabilities point to liquidity and solvency challenges typical of startup phases but require monitoring. The overdue accounts filing indicates administrative and compliance risks, which could exacerbate financial difficulties if unresolved.

The company's small size and micro-entity status mean it operates with limited resources and reporting requirements, but the current financial structure is "fragile." The 5-employee base suggests modest operational scale, which may limit revenue generation capacity in the short term.

The director, who has significant control, should be alert to these warning signs to avoid deeper financial distress or insolvency.

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4. Recommendations

Short-Term Actions:

• Improve Cash Flow Management: Prioritize collection of receivables and negotiate extended payment terms with creditors to improve liquidity.
• Capital Injection: Consider additional equity investment or short-term financing to shore up net assets and working capital.
• File Overdue Accounts Immediately: To avoid penalties and maintain regulatory compliance, submit overdue accounts without delay.

Medium-Term Actions:

• Cost Control: Evaluate operational costs and employee productivity to ensure expenses align with revenue generation.
• Financial Monitoring: Implement monthly cash flow forecasting and financial reporting to detect negative trends early.
• Explore Growth Opportunities: Increase sales efforts or diversify client base to improve turnover and profitability.

Governance:

• Strengthen internal controls and ensure timely compliance with Companies House filings and statutory obligations to prevent administrative penalties.

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