RICHARD HIRST LIMITED

Executive Summary

Richard Hirst Limited’s financial health has deteriorated in 2023, showing negative net assets and working capital deficits, signaling liquidity stress and potential solvency concerns. As a small, asset-light company, it must urgently improve cash flow and control liabilities to restore financial stability. With prompt action, the company can recover and maintain operational viability.

RICHARD HIRST LIMITED - Analysis Report

Company Number: SC684759

Analysis Date: 2025-07-29 20:21 UTC

Financial Health Assessment of Richard Hirst Limited

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1. Financial Health Score: D

Explanation:
Richard Hirst Limited shows signs of financial distress in its latest financial year (2023), with negative net current assets and net liabilities on the balance sheet. The company moved from a positive net asset position in previous years to a deficit in 2023, indicating emerging financial strain. While not yet insolvent, these symptoms warrant close monitoring and corrective action.

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2. Key Vital Signs

Metric	2023 Value	Interpretation
Fixed Assets	£1,180	Minimal long-term assets; indicates a light asset base.
Current Assets	£4,203	Cash, receivables, and stock available to cover short-term debts.
Current Liabilities	£5,524	Short-term debts due within one year; increased significantly in 2023.
Net Current Assets (Working Capital)	-£1,321	Negative working capital; cash flow constraints likely.
Total Assets Less Current Liabilities	-£141	Indicates liabilities exceed assets after adjusting for current debts.
Net Assets / Shareholders' Funds	-£741	Negative equity; company value has eroded.
Share Capital	£10	Nominal share capital; minimal cushion against losses.
Average Number of Employees	1	Micro entity with very limited operational scale.

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3. Diagnosis: Financial Condition Analysis

• Symptoms of Distress:
  The sharp deterioration from positive net assets (£53 in 2022) to net liabilities (-£741) in 2023 indicates the company is showing symptoms similar to a patient developing an illness: the balance sheet reveals a weakening financial "immune system." The negative working capital (-£1,321) is a clear symptom of liquidity stress, meaning the company may struggle to meet short-term obligations without external support or improving cash flow.

• Underlying Causes:
  The significant increase in current liabilities (+£2,646 from 2022 to 2023) without a corresponding increase in current assets suggests that liabilities have grown faster than assets, likely due to increased payables, accrued expenses, or short-term borrowings. This imbalance can squeeze operational cash flow and limit the company’s ability to invest or respond to unexpected costs.

• Asset Base:
  The company holds minimal fixed assets (£1,180), indicating it is likely service-oriented or asset-light, consistent with its construction-related SIC code focused on railways and underground railways. This means the company’s value and operational capability depend heavily on contracts, receivables, and operational efficiency rather than physical assets.

• Size and Scale:
  Being a micro-entity with only one employee (likely the director), the company operates on a very small scale, which limits its operational resilience to market fluctuations or financial shocks.

• Governance and Control:
  The controlling individual owns 75-100% of shares and voting rights, concentrating decision-making. This can be both a strength (agile decision-making) and a risk if not balanced with professional financial oversight.

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4. Prognosis: Future Financial Outlook

• Without intervention, the negative net asset position and strained liquidity could worsen, potentially leading to insolvency risks or the need for restructuring.
• However, as a micro-entity with minimal fixed assets and liabilities mostly current in nature, the company may recover if it improves cash collection, controls expenses, or secures additional funding.
• The upcoming filing deadlines are in good standing, indicating compliance and operational management are maintained, which is positive for future prospects.

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5. Recommendations: Actions to Improve Financial Wellness

• Improve Cash Flow Management:
  Tighten credit control to reduce receivables aging and accelerate cash inflows. Negotiate extended payment terms with suppliers to ease current liabilities pressure.

• Cost Control and Expense Review:
  Conduct detailed expense analysis to identify and eliminate unnecessary costs, especially short-term liabilities driving the working capital deficit.

• Capital Injection or Financing:
  Consider equity injection or short-term financing to restore positive net assets and support operational liquidity. Given the small scale, even modest additional capital can stabilize the balance sheet.

• Regular Financial Monitoring:
  Implement monthly cash flow forecasting and financial review meetings to detect early signs of distress and respond swiftly.

• Professional Advice:
  Engage a financial advisor or accountant periodically to review financial strategy, tax planning, and compliance to ensure business sustainability.

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Medical Analogy Summary:

Richard Hirst Limited currently exhibits "symptoms of financial distress" akin to a patient whose vital signs have worsened over time—negative working capital and net liabilities resemble a "weakening heartbeat" for business health. Immediate "treatment" through cash flow management and capital support is essential to prevent progression to "critical condition," i.e., insolvency.

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