RAMS AUTOMATION LIMITED

Executive Summary

RAMS Automation Limited maintains a generally healthy financial condition with strong cash reserves and positive equity, but recent declines in working capital and shareholders' funds suggest emerging liquidity and profitability pressures. Proactive management of cash flow, asset investment, and profitability will be key to sustaining financial wellness and supporting future growth.

RAMS AUTOMATION LIMITED - Analysis Report

Company Number: 13532827

Analysis Date: 2025-07-20 17:19 UTC

Financial Health Assessment for RAMS AUTOMATION LIMITED

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1. Financial Health Score: B

Explanation:
RAMS Automation Limited exhibits solid financial metrics overall, with healthy liquidity and positive net assets. However, there is a noticeable decline in working capital and shareholders’ funds in the latest financial year, suggesting some emerging pressure that should be monitored. The company remains financially sound but shows symptoms that warrant attention to maintain stability.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	22,345	32,255	Decreased liquidity, potential tightening cash flow
Cash at Bank	20,663	28,135	Healthy cash balance but reduced by ~27%
Debtors	1,682	4,120	Lower receivables, possibly improved collections or reduced sales
Current Liabilities	10,212	11,731	Slight reduction in short-term debts
Net Current Assets (Working Capital)	12,133	20,524	Reduced working capital, indicating less buffer for day-to-day operations
Total Assets Less Current Liabilities	18,954	28,587	Decreased net assets, reflects overall financial contraction
Shareholders' Funds (Equity)	18,954	28,587	Lower retained earnings, possible accumulated losses or distributions
Fixed Assets (Net Book Value)	6,821	8,063	Slight asset base reduction, depreciation outpacing additions

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3. Diagnosis: Financial Condition Analysis

• Liquidity and Cash Flow:
  The company shows a "healthy cash flow" with cash reserves well above current liabilities (~2:1 ratio), which is a positive sign akin to a patient with a strong pulse and stable vitals. However, the 27% reduction in cash and working capital signals potential tightening of liquidity, a symptom that could indicate slower inflows or increased outflows.

• Solvency and Capital Structure:
  Shareholders’ funds remain positive and comfortably above liabilities, signifying the company is solvent and has a healthy equity cushion. However, the 34% decline in equity over the year resembles a slight drop in the patient’s red blood cell count—still adequate but trending downward. This could indicate retained losses, dividends paid out, or investments not yet generating returns.

• Asset Management:
  The drop in fixed assets net book value suggests depreciation is currently outweighing asset purchases, possibly signaling underinvestment in long-term operational capacity or asset aging, which could impact future productivity.

• Revenue and Receivables:
  Reduced debtors may reflect improved debtor management or a dip in sales. Without turnover data, this is an unclear symptom but should be monitored.

• Company Size and Context:
  Being a private limited company operating in electrical installation (SIC 43210), with 2 employees, RAMS Automation fits the micro/small size profile. The financials reflect typical early-stage or small-business dynamics with modest capital and cash flow management.

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4. Recommendations: Steps to Improve Financial Wellness

• Strengthen Working Capital:
  Explore options to improve cash inflows—accelerate debtor collections, negotiate better payment terms with suppliers, or optimize inventory if applicable. This will build a stronger buffer to absorb operational shocks.

• Monitor Cash Flow Trends Closely:
  Maintain a detailed cash flow forecast to anticipate liquidity crunches early and manage expenditures carefully, avoiding unnecessary cash outflows.

• Evaluate Asset Replacement Strategy:
  Review fixed assets for potential upgrades or replacements to prevent operational decline due to aging equipment. Balanced reinvestment is crucial for long-term health.

• Review Profitability and Retained Earnings:
  Investigate causes for the decline in retained earnings. If profitability is under pressure, consider cost control measures or pricing reviews to improve margins.

• Consider External Financing if Needed:
  If growth or investment is planned, explore external funding options to supplement equity without compromising liquidity.

• Maintain Compliance and Governance:
  Continue timely filing of accounts and returns, and ensure strong corporate governance to maintain stakeholder confidence.

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