ROCOCONSULTANTS LTD

Executive Summary

ROCOCONSULTANTS LTD is financially stable yet exhibits warning signs such as declining equity and tightened liquidity, indicating cautious monitoring is necessary. Strengthening working capital and halting equity erosion should be priorities to ensure long-term financial health and operational resilience.

ROCOCONSULTANTS LTD - Analysis Report

Company Number: SC706225

Analysis Date: 2025-07-20 15:39 UTC

Financial Health Assessment: ROCOCONSULTANTS LTD

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1. Financial Health Score: C

Explanation:
ROCOCONSULTANTS LTD demonstrates modest financial stability but exhibits clear signs of financial strain, particularly in liquidity and capital retention. The company’s micro-entity scale and limited asset base constrain its financial resilience. The downward trend in shareholders’ funds and tightening working capital indicate symptoms of financial distress, limiting the company’s ability to absorb shocks or invest in growth without corrective action.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	2,369	Very low fixed asset base typical for a consultancy; suggests low capital investment in equipment or property.
Current Assets	13,787	Includes cash, receivables, and other short-term assets; has decreased compared to prior year.
Current Liabilities	11,941	Short-term debts and payables; notably increased, placing pressure on liquidity.
Net Current Assets (Working Capital)	1,846	Positive but thin margin (£13,787 - £11,941); indicates limited buffer to cover short-term debts.
Shareholders’ Funds (Equity)	3,315	Declined sharply from £9,248 in 2023; suggests accumulated losses or distributions exceeding profits.
Liquidity Ratio (Current Assets / Current Liabilities)	~1.15	Slightly above 1, which is the minimum to cover liabilities; indicates a fragile liquidity position.
Employee Count	0	No employees; likely owner-managed or subcontracted, which reduces fixed costs but may limit operational scale.

Interpretation of Vital Signs:
The company’s liquidity is just sufficient but deteriorating, a "weak pulse" in financial terms. The shrinking equity is a "warning symptom" of possible erosion of capital which can undermine long-term viability. However, the absence of employees suggests a low fixed cost base, which might provide flexibility.

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3. Diagnosis

ROCOCONSULTANTS LTD’s financial health shows symptoms of distress primarily due to shrinking equity and tightening liquidity. The decline in shareholders’ funds from £9,248 to £3,315 in one year signals that the company may have incurred losses or paid out dividends beyond its retained earnings, weakening its financial foundation. The slight increase in current liabilities alongside reduced current assets means the company has less short-term cushion—akin to a patient with borderline blood pressure—adequate for now but vulnerable under stress.

The absence of employees points to a lean operational model, which may help manage costs but can also constrain growth potential. The micro-entity status and industry as management consultancy indicate a service-oriented business with low physical asset needs but high reliance on cash flow from clients.

Overall, the company is stable but precarious, needing careful monitoring and potentially intervention to avoid financial "infection" that could lead to insolvency.

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4. Recommendations

To improve and maintain financial wellness, the following steps are advisable:

• Strengthen Liquidity:
  Increase cash reserves or reduce short-term liabilities. Consider negotiating longer payment terms with creditors or accelerating receivables collection to improve working capital.

• Stop Equity Drain:
  Investigate causes for decline in shareholders’ funds. If due to losses, review cost structure and pricing strategy to return to profitability. Avoid unnecessary dividend payments until equity recovers.

• Enhance Financial Monitoring:
  Implement monthly cash flow forecasting to detect financial stress early. Treat this like regular vital sign checks to maintain financial health.

• Consider Capital Injection:
  If personal funds or loans from shareholders are an option, injecting capital can rebuild equity and strengthen the balance sheet.

• Operational Review:
  Analyze client base and contracts to enhance revenue stability. Explore diversification or value-added services to improve income streams without significantly increasing fixed costs.

• Compliance and Governance:
  Maintain timely filing of accounts and confirmation statements to avoid penalties which could add to financial strain.

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