R&P AGRI TECH LTD

Executive Summary

R&P Agri Tech Ltd demonstrates stable ownership and modest net asset growth but faces significant liquidity challenges due to rising short-term liabilities exceeding current assets. The company should prioritize improving working capital management and evaluating the productivity of recent fixed asset investments to ensure sustainable financial health and avoid cash flow distress.

R&P AGRI TECH LTD - Analysis Report

Company Number: 13815607

Analysis Date: 2025-07-29 14:25 UTC

Financial Health Assessment: R&P Agri Tech Ltd (As at 31 December 2024)

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1. Financial Health Score: C

Explanation:
R&P Agri Tech Ltd shows some strengths, particularly in net asset growth and shareholder equity, but there are concerning signs in liquidity (negative net current assets) that indicate cash flow stress. The company is still young (incorporated late 2021) and classified as a Micro entity, which limits the scale but also reduces complexity. The "C" grade reflects a moderate financial health condition with early warning signs requiring attention.

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2. Key Vital Signs:

Metric	2024 Value (£)	Interpretation
Fixed Assets	13,327	Increased significantly, indicating investment in long-term resources. Healthy sign if assets are productive.
Current Assets	4,384	Relatively low compared to liabilities, potential liquidity risk.
Current Liabilities	11,912	Increased sharply, more than doubling from previous year; could indicate rising short-term obligations.
Net Current Assets (Working Capital)	-7,528	Negative value; a symptom of liquidity distress. The company may struggle to meet short-term debts.
Net Assets (Equity)	5,799	Positive and increasing slightly, showing retained earnings or capital injection.
Average Number of Employees	3	Stable staffing for a micro entity, suggests controlled operational scale.

Interpretation of Vital Signs:
The sharp increase in current liabilities coupled with a decrease in net current assets to a negative figure signals a potential cash flow problem—akin to a patient showing symptoms of shortness of breath. Although fixed assets have increased, this "investment" must generate returns to improve liquidity. The positive net assets offer a cushion but may not be accessible in the short term.

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3. Diagnosis:

Liquidity Stress & Working Capital Deficiency:
The company’s net current liabilities (working capital deficit of £7,528) are a sign that it may not have enough liquid resources to cover immediate debts. This is comparable to a patient whose vital signs indicate dehydration—management of short-term cash inflows and outflows needs urgent attention to avoid financial distress.

Growth & Asset Investment:
An almost 130% increase in fixed assets suggests capital spending, possibly on agricultural equipment or property, aligning with the company’s SIC code (activities of agricultural holding companies). This is a positive long-term investment but may be tying up cash, impacting liquidity.

Stable Ownership & Governance:
Both directors/PSC holders have shared control and have not changed, indicating stable leadership. No overdue filings or compliance issues were noted, which is a positive governance indicator.

Profitability & Retained Earnings:
The net asset growth implies some retained profits or capital contributions, but without profit and loss data, it is hard to confirm operational profitability. The absence of audit (micro-entity exemption) is typical but limits external assurance.

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4. Recommendations:

• Improve Liquidity Management:
  Immediate focus should be on converting current assets to cash faster and negotiating longer payment terms with creditors. Consider short-term financing options to bridge working capital gaps if necessary.

• Review Capital Expenditure:
  Evaluate the return on the increased fixed assets. If these are not generating sufficient returns, consider whether any assets can be liquidated or better utilized.

• Cash Flow Forecasting:
  Implement rigorous cash flow forecasting to detect and manage liquidity crunches proactively—akin to monitoring a patient’s hydration levels continuously.

• Cost Control:
  With stable employee numbers, review operating costs to ensure they align with revenue generation. Cost overruns could exacerbate liquidity issues.

• Explore Revenue Growth:
  As a company in the agricultural holdings sector, look for opportunities to scale sales or diversify income streams to improve cash inflows.

• Maintain Compliance & Transparency:
  Continue timely filings and consider voluntary audits or reviews to enhance financial transparency and stakeholder confidence.

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