RM TYRES LTD

Executive Summary

RM TYRES LTD is a newly formed micro-entity showing early signs of financial distress, with negative net assets and working capital indicating liquidity challenges. Immediate capital infusion and stringent cash flow management are crucial to stabilize the business. With corrective actions, the company can improve its financial health and build a sustainable foundation for growth.

RM TYRES LTD - Analysis Report

Company Number: 15169231

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

Financial Health Assessment of RM TYRES LTD

---

1. Financial Health Score: D

Explanation: The company currently shows a negative net asset position (net liabilities) of £4,811, which signals financial distress at this early stage. This is a concerning vital sign for a newly incorporated business, indicating a fragile balance sheet and potential solvency risk. Although the company is micro-sized and newly formed, the negative equity suggests an urgent need for corrective financial management.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	3,214	Limited liquid assets available to cover short-term obligations.
Current Liabilities	8,025	Short-term debts exceed assets, indicating liquidity strain ("symptom of distress").
Net Current Assets	-4,811	Negative working capital—a red flag showing the company cannot cover immediate debts with current assets.
Net Assets	-4,811	Negative equity means liabilities exceed total assets; a critical warning sign.
Shareholders' Funds	-4,811	Owner’s capital is in deficit, reflecting accumulated losses or undercapitalization.
Employee Count	1	Very small workforce consistent with micro-entity status but limited operational scale.

Interpretation: The negative net assets and net current assets are key "vital signs" indicating financial imbalance. The company’s liabilities outweigh its assets, implying it may struggle to meet obligations as they fall due, a classic "symptom" of financial distress in early-stage businesses.

---

3. Diagnosis

RM TYRES LTD is a newly incorporated micro-entity operating in vehicle maintenance and repair. Despite its recent establishment, the company’s balance sheet shows a negative net asset position of £4,811, which is unusual for a new start-up and suggests initial funding was insufficient to cover liabilities or that initial expenses have outpaced capital injections.

The negative working capital indicates a liquidity crunch — the company does not currently have enough short-term assets to meet its short-term liabilities. This puts pressure on cash flow and operational sustainability, especially in a trade like vehicle maintenance where timely supplier payments and cash availability are crucial.

The company is still in its infancy, with only one employee (likely the director) and no sign of overdue filings or compliance issues, which is positive. However, the financial "symptoms" highlight a fragile financial state that, if unaddressed, could lead to solvency problems.

---

4. Recommendations

Immediate Actions:

• Capital Injection: The company should consider additional capital contributions from shareholders or external investors to restore positive equity and strengthen the balance sheet.
• Cash Flow Management: Implement strict cash flow forecasting and control measures to monitor payment schedules, especially to suppliers, to avoid worsening the liquidity crunch.
• Cost Review: Review operating costs and overheads to identify any unnecessary expenses that can be reduced or deferred.
• Credit Terms Negotiation: Negotiate with creditors for extended payment terms to ease immediate cash outflows.
• Financial Planning: Establish a financial plan focusing on reaching positive working capital and profitability within the next 12 months.

Medium-Term Strategies:

• Revenue Growth: Focus on increasing sales through marketing or service expansion to generate healthier cash inflows.
• Monitor Financial Health: Regularly review financial statements and key performance indicators to detect early warning signs of distress.
• Seek Professional Advice: Consider consulting a business advisor or insolvency practitioner if financial strain persists.

---

Medical Analogy Summary

The company exhibits "symptoms of distress" in its financial "vital signs"—negative net assets and working capital suggest it is currently "unwell" with liquidity and solvency challenges. Without prompt "treatment" (capital injection and cost control), RM TYRES LTD risks financial "deterioration." However, with "early intervention," there is potential for recovery and stabilization.

---