RINGRONE INTELLIGENCE LTD

Executive Summary

RINGRONE INTELLIGENCE LTD exhibits serious liquidity challenges with current liabilities significantly exceeding current assets, heavily reliant on director loans to maintain operations. While its net asset position is positive due to investments in subsidiaries, poor working capital and subsidiary losses raise concerns about short-term financial stability. Immediate action to improve cash flow, renegotiate liabilities, and enhance operational performance is essential to restore financial wellness.

RINGRONE INTELLIGENCE LTD - Analysis Report

Company Number: 13903458

Analysis Date: 2025-07-20 19:06 UTC

Financial Health Assessment of RINGRONE INTELLIGENCE LTD (As at 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company's financial condition shows significant signs of distress largely due to a severe working capital deficit and a reliance on director loans to sustain operations. Although the net asset position is positive, this is mainly due to substantial fixed asset investments in subsidiaries rather than liquid resources. The inability to cover current liabilities with current assets is a critical symptom of liquidity risk, warranting a below-average grade.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	32,133	Very low; mostly debtors and cash but insufficient to cover short-term debts
Cash at Bank	9,733	Low cash reserves, down from previous year, indicating cash flow strain
Debtors	22,400	Moderate but slow collection possibly impacting liquidity
Current Liabilities	520,916	Extremely high short-term obligations compared to assets
Net Current Assets (Working Capital)	-488,783	Negative working capital, a critical warning sign of liquidity distress
Fixed Assets (Investments)	495,227	Large investment in subsidiaries boosts net assets but illiquid
Net Assets/Shareholders Funds	6,444	Positive but minimal equity buffer; increased slightly over prior year
Director Loan Included in Creditors	499,000	Indicates heavy reliance on director financing for operations
Revenue Recognition Policy	N/A	Conservative, based on stage of completion, but profit/loss data not disclosed

Interpretation:

• The "heart rate" of the business — its cash flow and liquid assets — is weak, with liquidity symptoms resembling a "patient" struggling to meet immediate obligations.
• The "bones" of the business, represented by the investment in subsidiaries, appear sturdy but are not readily convertible to cash.
• The "circulatory system" is clogged by very high current liabilities, most notably a large director loan, raising concerns about the sustainability of operations without external funding or improved cash flow.

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3. Diagnosis

• Liquidity Distress: The company is exhibiting symptoms of acute liquidity stress. With current liabilities exceeding current assets by nearly £489k, the business cannot currently cover its short-term debts using its liquid resources. This is akin to a patient having insufficient blood flow to vital organs.
• Capital Structure Concern: The company’s capital is thin, with shareholders' funds just £6,444, mostly arising from investments and retained earnings. The substantial loan from a director (£499k) acts like an artificial "life support" system, propping up the company but posing risk if the director withdraws support.
• Asset Quality: The fixed assets are primarily investments in a subsidiary, which itself is showing negative capital and losses. This indicates underlying operational challenges in the group, limiting the ability to generate cash flow from these assets quickly.
• Profitability Unknown: The absence of disclosed profit and loss data limits full assessment of operational health. However, the subsidiary’s losses suggest ongoing operational challenges.
• Going Concern: Directors affirm going concern status, but the financial indicators suggest caution; the company needs to improve liquidity or secure additional funding to avoid financial distress.

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4. Recommendations

1. Improve Liquidity Management:

   • Prioritize collection of debtors to increase cash reserves.
   • Negotiate extended payment terms with creditors to reduce immediate cash outflows.
   • Consider restructuring the director loan into longer-term financing or equity to relieve short-term pressure.

2. Enhance Operational Performance:

   • Review the subsidiary’s business plans to identify causes of losses and implement cost controls or growth strategies.
   • Explore divestment or refinancing options for the subsidiary investments if they are not expected to turn profitable soon.

3. Financial Reporting and Transparency:

   • Provide fuller disclosure in financial statements, especially profit and loss accounts, to allow better assessment of operational results and cash flows.
   • Regularly monitor key financial ratios and cash flow forecasts to detect early signs of distress.

4. Strategic Funding:

   • Seek external equity or debt funding to strengthen the capital base and reduce reliance on director loans.
   • Explore government grants or support schemes if applicable.

5. Governance and Risk Management:

   • Maintain strong oversight on cash flow and creditor management.
   • Ensure directors actively review financial health, considering contingency plans if liquidity worsens.

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