ROVERS FISHING TACKLE LTD

Executive Summary

Rovers Fishing Tackle Ltd is showing initial financial stress with negative net assets and working capital deficits, signaling liquidity challenges typical of a start-up phase. However, director support and asset investments provide a foundation for recovery if immediate attention is given to cash flow management and capital restructuring. Focused action can restore financial health and ensure sustainable growth.

ROVERS FISHING TACKLE LTD - Analysis Report

Company Number: 14863616

Analysis Date: 2025-07-20 17:38 UTC

Financial Health Assessment for ROVERS FISHING TACKLE LTD (as of 31 May 2024)

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1. Financial Health Score: D

Explanation:
The company shows significant signs of financial stress with negative net assets and working capital deficits, indicating a precarious liquidity and solvency position for this early stage in its life cycle. The financial structure is fragile, but as a newly incorporated entity, this is not uncommon if growth and investment plans are underway. Caution and remedial action are essential to prevent further deterioration.

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2. Key Vital Signs:

Metric	Value (£)	Interpretation
Fixed Assets	58,140	Healthy investment in long-term assets, mainly goodwill, signaling acquisition or business combination.
Current Assets	37,414	Relatively low current assets, with a stock-heavy composition (24,358).
Cash at Bank	9,761	Limited cash reserves, a potential concern for immediate liquidity needs.
Current Liabilities	86,119	High short-term obligations exceeding current assets, indicating liquidity strain.
Net Current Assets	-48,705	Negative working capital; company may struggle to meet short-term obligations — a classic symptom of cash flow distress.
Total Assets Less Current Liabilities	9,435	Positive but slim buffer after short-term liabilities are deducted from total assets.
Creditors > 1 Year	20,189	Medium-term liabilities add to financial burden.
Net Assets / Shareholders’ Funds	-10,754	Negative equity position, signalling insolvency on a balance sheet basis.

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3. Diagnosis:

The financial "vital signs" show a company in its infancy stage facing liquidity and solvency challenges:

• Liquidity (Cash Flow Health): Negative net current assets (-£48,705) indicate a "symptom of distress" in meeting short-term debts. Cash reserves of £9,761 are low compared to current liabilities, which could lead to cash flow crises unless managed carefully.

• Solvency (Balance Sheet Strength): Negative net assets (-£10,754) suggest the company’s liabilities exceed its assets, a worrying "diagnostic marker" for solvency. This may be due to initial start-up costs, capital structure, or goodwill amortisation.

• Business Model & Investment: The company has invested heavily in goodwill (£57,750), reflecting acquisition costs or brand value. Tangible assets are minimal, showing an asset-light retail model focused on sports goods and fishing gear.

• Support & Going Concern: The director indicates confidence in continuing support for the business, suggesting that despite distress symptoms, management believes in the going concern viability, likely based on future cash inflows or capital injections.

• Other Symptoms: The director's current accounts creditor balance (£7,401) shows related party funding which might reflect personal financial backing, a positive factor for short-term survival.

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4. Recommendations:

To improve financial wellness and recover a healthy financial pulse, the company should consider:

• Improve Liquidity Management:

  • Tighten control of working capital by accelerating debtor collections, managing stock levels prudently to free cash, and negotiating extended payment terms with suppliers.
  • Build cash reserves through careful budgeting and control of discretionary spending.

• Re-examine Capital Structure:

  • Explore options to restructure or refinance medium and long-term liabilities (£20,189) to ease immediate cash pressure.
  • Consider fresh equity injections or director loans to improve net assets and shore up the balance sheet.

• Monitor Amortisation and Asset Impairment:

  • Keep a close watch on goodwill amortisation and any potential impairment risks, which could further dent net assets.

• Business Growth & Profitability:

  • Focus on increasing sales and gross margins, especially given the retail sector’s competitive nature (SIC 47640).
  • Consider strategic marketing to drive customer acquisition and retention.

• Regular Financial Monitoring:

  • Implement monthly cash flow forecasting and financial reviews to detect early warning "symptoms" of distress and respond proactively.

• Director & Stakeholder Communication:

  • Maintain transparent communication with stakeholders including creditors and investors to build confidence and secure ongoing support.

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Summary:

ROVERS FISHING TACKLE LTD is currently exhibiting early signs of financial distress, particularly in liquidity and solvency, with negative working capital and net assets. However, as a newly incorporated company with director backing, there remains potential for recovery with prudent financial management and strategic focus on cash flow and capital structure improvements.