RAE-RAY CONSULTANCY SERVICES LTD

Executive Summary

RAE-RAY CONSULTANCY SERVICES LTD is currently in a fragile financial state with severely limited liquidity and minimal equity, signaling urgent need for financial intervention. Immediate steps to improve cash flow, review operations, and strengthen the capital base are essential to restore business health and avoid insolvency risks.

RAE-RAY CONSULTANCY SERVICES LTD - Analysis Report

Company Number: 12939189

Analysis Date: 2025-07-29 16:09 UTC

Financial Health Assessment for RAE-RAY CONSULTANCY SERVICES LTD

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1. Financial Health Score: D

Explanation:
The company shows critical signs of financial distress with minimal net assets (£1), no current assets in the latest year, and a working capital deficit. The score "D" reflects a fragile financial position that requires urgent attention to avoid deeper trouble.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£718	Small asset base, likely equipment or intangible assets
Current Assets	£0	No liquid assets or receivables—symptom of cash flow issues
Current Liabilities	£717	Liabilities nearly equal to fixed assets, payable soon
Net Current Assets	-£717	Negative working capital suggests liquidity problems
Net Assets / Shareholders’ Funds	£1	Extremely low equity, indicating insolvency risk
Share Capital	£1	Minimal invested capital, little financial buffer
Employee Count	1	Micro entity with very limited human resources

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3. Diagnosis

The financial "vital signs" reveal several symptoms of distress:

• Liquidity Crisis: Current assets have fallen to zero from £14,435 last year, while current liabilities remain significant (£717). This negative working capital signals the company may struggle to meet short-term obligations, akin to a patient with dangerously low blood pressure risking organ failure.

• Shrunken Asset Base: Fixed assets are minimal and unchanged, suggesting little investment or growth activity. The absence of current assets (cash or receivables) indicates no healthy cash flow or operational inflow.

• Eroded Equity: Net assets stand at just £1, a severe depletion from £17,001 in 2021. This is comparable to a patient whose vital organ function has severely deteriorated, putting the business at risk of insolvency or creditor action.

• Minimal Capitalization: With share capital of only £1, the company has almost no financial reserves to absorb shocks or fund expansion.

• Micro Entity Profile: Operating with one employee and micro-entity status limits business scale but also restricts financial flexibility.

Overall, the company is in a precarious state resembling a patient experiencing critical symptoms: impaired liquidity, diminished reserves, and insufficient operational resources.

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4. Recommendations

To improve financial wellness, the company should consider the following actions:

1. Boost Liquidity (Emergency Resuscitation):

   • Inject working capital through equity investment or short-term loans to restore current assets.
   • Improve cash collection and reduce outstanding payables to rebalance working capital.

2. Operational Review (Diagnostic Evaluation):

   • Analyze revenue streams and cost structure to uncover the root cause of asset depletion.
   • Assess whether the business model or pricing strategy requires adjustment to generate positive cash flow.

3. Financial Management Controls (Stabilisation Therapy):

   • Implement tighter cash flow monitoring and budgeting to prevent further erosion.
   • Explore cost-cutting measures or renegotiation of creditor terms to ease short-term pressures.

4. Capital Structure Strengthening (Strengthening the Immune System):

   • Consider increasing share capital or bringing in new investors to build a financial buffer.
   • Review potential for grants or government support applicable to micro businesses in consultancy.

5. Seek Professional Advice (Specialist Consultation):

   • Engage with a financial advisor or turnaround specialist to design a recovery plan.
   • Early intervention can prevent progression to insolvency or formal liquidation.

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