Company Number: 13127841

Analysis Date: 2025-07-20 12:13 UTC

Financial Health Assessment of RHN CONSULTANCY LTD as at 31 March 2024

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1. Financial Health Score: B

Explanation:
RHN Consultancy Ltd exhibits solid financial footing with positive net assets and healthy working capital. The company is growing moderately with increasing net assets and fixed assets over the years. However, there is a slight reduction in net current assets and an increase in current liabilities in the latest year, which warrants cautious monitoring. Overall, the company shows signs of financial wellness but with mild symptoms that need attention to maintain this trajectory.

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2. Key Vital Signs (Core Financial Metrics)

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	40,695	27,650	Growing investment in long-term assets—positive sign.
Current Assets	178,568	164,971	Healthy liquid resources to cover short-term obligations.
Current Liabilities	110,322	86,999	Noticeable increase; could indicate rising short-term debt.
Net Current Assets (Working Capital)	68,246	77,972	Still positive but decreased, indicating tightening liquidity.
Creditors After One Year	14,135	19,124	Reduction in long-term liabilities—improves solvency.
Net Assets (Equity)	94,806	86,498	Equity rising—indicative of retained earnings and growth.
Share Capital	100	100	Minimal share capital, common for micro companies.
Average Number of Employees	6	3	Business expanding workforce, signaling growth.

Interpretation of Vital Signs:

• Healthy Cash Flow Indicator: Positive net current assets imply adequate short-term liquidity, a vital sign akin to a healthy pulse.
• Asset Growth: Increasing fixed assets reflect investment in business infrastructure, a sign of vitality and forward planning.
• Rising Current Liabilities: While growth in liabilities may be normal in expansion, a sharp rise can be a symptom of cash flow strain—requires monitoring.
• Equity Growth: Increasing shareholders’ funds demonstrate retained profits and strengthen the company’s financial backbone.

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3. Diagnosis (What the Financial Data Reveals)

RHN Consultancy Ltd shows a generally healthy financial condition for a micro-entity in its early years. The company has steadily increased its asset base and equity, indicating that profits are being retained and reinvested. The workforce has doubled in size, suggesting business growth and possibly increasing revenues.

However, the increase in current liabilities outpaces the growth in current assets in the last financial year, leading to a reduction in net working capital from £77,972 to £68,246. This can be likened to a "mild symptom of financial stress" where short-term obligations are growing faster than liquid assets, potentially placing pressure on operational cash flow.

The reduction in long-term creditors is a positive development, indicating the company is managing to reduce longer-term debt burden, improving financial stability.

Being classified as a micro-entity, RHN Consultancy operates with minimal share capital and benefits from simplified reporting, which aligns with its size and stage.

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4. Recommendations (Actions to Improve Financial Wellness)

• Strengthen Liquidity Management:
  Monitor and manage current liabilities carefully to prevent cash flow bottlenecks. Consider negotiating longer payment terms with suppliers or optimizing receivables collection to maintain a healthy working capital buffer.

• Maintain Asset Investment Discipline:
  Continue measured investments in fixed assets that support business growth but avoid overextending resources that could tie up cash unnecessarily.

• Regular Financial Monitoring:
  Implement monthly cash flow forecasting and variance analysis to detect early signs of financial strain and respond proactively.

• Growth with Caution:
  As the workforce expands, ensure that revenue growth supports increased overheads to avoid overextension.

• Consider Capital Structure Review:
  Though share capital is minimal, explore if additional equity injection or retained earnings utilization could support strategic investments or buffer liquidity.

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Executive Summary