REDWOOD INNOVATION LTD

Executive Summary

REDWOOD INNOVATION LTD is a micro-entity with a small but positive net asset position, showing signs of shrinking equity indicative of limited profitability or reinvestment challenges. The company is currently solvent with manageable short-term liabilities but should focus on improving liquidity and profitability to ensure sustainable growth. Close financial monitoring and potential capital infusion are advised to strengthen its fragile financial health.

REDWOOD INNOVATION LTD - Analysis Report

Company Number: 13887544

Analysis Date: 2025-07-20 16:58 UTC

Financial Health Assessment for REDWOOD INNOVATION LTD

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1. Financial Health Score: C

Explanation:
The company shows minimal net assets and working capital, reflecting a very small scale of operations consistent with its micro-entity status. While it is not currently showing signs of immediate distress (no liabilities exceeding assets), the shrinking net assets and low liquidity suggest cautious monitoring is required. Given the limited financial data and small asset base, the grade reflects a stable but fragile financial condition.

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2. Key Vital Signs:

Metric	2024 Value (£)	Interpretation
Current Assets	873	Very low cash and short-term asset base, indicating limited liquidity.
Current Liabilities	242	Small short-term debts, manageable given current assets.
Net Current Assets	631	Positive working capital but small; company can cover short-term debts but with little buffer.
Net Assets (Shareholders’ Funds)	631	Small equity base, showing limited retained earnings or capital investments.
Employee Count	1	Very small workforce, typical for micro-entity, but limits operational capacity.

• Trend Analysis: Net assets decreased from £1,024 in 2023 to £631 in 2024, a decline of approximately 38%. This shrinking equity base signals that the company might be consuming capital or not generating sufficient profits.

• Liquidity: The company maintains positive net current assets, indicating a "healthy cash flow" in the sense it can meet short-term obligations, but with a narrow margin.

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3. Diagnosis:

REDWOOD INNOVATION LTD presents as a micro-scale construction business with very modest financial resources. The "symptoms" it shows—declining net assets and low current assets—could indicate early signs of financial strain if not addressed, especially in a sector like construction which can experience cash flow fluctuations.

The company’s balance sheet is free from alarming debts, and it remains solvent with positive net assets. However, the decrease in equity and current assets over the last year suggests limited profitability or possible reinvestment losses.

The small size (single employee and director-owner) implies reliance on a very focused management approach but also exposes the company to operational risks if that individual is unavailable or unable to manage business effectively.

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4. Recommendations:

• Improve Liquidity Buffer: Seek to increase current assets, particularly cash or receivables, to build a stronger working capital buffer. This can be through tighter credit control or improving billing cycles.

• Profitability Focus: Review pricing, cost control, and contract selection to improve profit margins and prevent further erosion of equity.

• Capital Injection: Consider additional capital contributions or loans from the owner or investors to strengthen the equity base and support growth or cushion downturns.

• Operational Scaling: Given the micro scale, explore partnerships or subcontracting to manage workloads and reduce fixed overheads, improving financial sustainability.

• Financial Monitoring: Implement regular financial reviews to detect early signs of distress, enabling timely corrective action.

• Compliance and Reporting: Continue timely filing of accounts and returns to avoid penalties and maintain good standing.

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