RISKCOM SOLUTIONS LTD

Executive Summary

RISKCOM SOLUTIONS LTD is currently in a financially fragile state characterized by negative net assets and working capital, indicating liquidity stress and a potential risk of insolvency if unaddressed. Immediate focus on cash flow management, cost control, and capital injection is essential to restore financial health and ensure sustainable operations. Proactive financial planning and monitoring will be critical to reversing current adverse trends.

RISKCOM SOLUTIONS LTD - Analysis Report

Company Number: 13164860

Analysis Date: 2025-07-20 14:02 UTC

Financial Health Assessment Report: RISKCOM SOLUTIONS LTD

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1. Financial Health Score: D

Explanation:
The company is currently showing signs of financial distress as indicated by negative net assets and working capital deterioration within a micro-entity framework. While it is not insolvent outright, the balance sheet "symptoms" suggest liquidity challenges and an impaired capital base, warranting close monitoring and corrective action.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	937	0	Slight investment in long-term assets; minimal.
Current Assets	7,703	39,789	Significant decrease in short-term liquid assets.
Current Liabilities	11,538	27,174	Decrease in short-term obligations; still high.
Net Current Assets	-3,732	15,787	Negative working capital; liquidity strain.
Net Assets (Shareholders' Funds)	-2,795	-321	Negative equity; company technically insolvent.
Share Capital	4	4	Minimal paid-in capital; limited financial buffer.

Interpretation of Vital Signs:

• Healthy cash flow analogy: The company’s "blood flow"—current assets—has reduced dramatically, indicating a weakened ability to meet short-term obligations ("oxygen supply").
• Symptoms of distress: Negative net current assets and net liabilities point to a "heart weakened by strain," i.e., the company’s short-term debts exceed its liquid assets, increasing insolvency risk.
• Low capital buffer: Minimal share capital means limited financial cushioning against shocks.

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3. Diagnosis

Underlying Business Health:
RISKCOM SOLUTIONS LTD operates in the management consultancy sector, a service industry that typically relies heavily on human capital and client billing cycles. The financial "symptoms" suggest the firm has experienced a significant reduction in liquid resources over the last year, pushing it into a net liabilities position. Despite a reduction in current liabilities, the sharper drop in current assets has led to negative working capital, indicating potential cash flow management issues or delayed client payments.

The negative net assets reflect accumulated losses or an erosion of retained earnings ("reserves"). The company's minimal fixed assets and share capital indicate it is asset-light and likely reliant on operational cash flows to sustain itself.

The average number of employees remained stable, suggesting no immediate downsizing but possibly increased pressure on operational cash flow per employee.

Risk Factors:

• Persistent negative equity may limit the company’s ability to raise external financing.
• Negative working capital is a warning sign of liquidity stress, potentially leading to payment defaults if not addressed.
• The micro-entity status limits the scope for raising capital through equity markets.

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4. Recommendations

Immediate Actions:

• Improve cash flow management: Tighten credit control to accelerate debtor collections; negotiate extended payment terms with suppliers to reduce current liabilities pressure.
• Cost control: Review operating expenses and consider temporary cost reductions or efficiency improvements to conserve cash.
• Capital injection: Seek additional equity investment or shareholder loans to restore positive net assets and improve financial stability.

Medium-Term Strategies:

• Financial planning: Implement rolling cash flow forecasts to anticipate liquidity crunches and plan accordingly.
• Build working capital buffer: Aim to rebuild net current assets through improved profitability and cash retention.
• Explore growth opportunities: Diversify client base or service offerings to increase revenue and reduce dependency on few customers.

Monitoring:

• Regularly review balance sheet trends and cash flow statements.
• Monitor compliance with filing deadlines to avoid penalties and demonstrate governance discipline.

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