RRM WAREHOUSING LIMITED

Executive Summary

RRM WAREHOUSING LIMITED is facing significant financial distress, indicated by negative net assets and a substantial operating loss, creating liquidity challenges. While the company remains operational, urgent measures are required to improve cash flow, reduce costs, and strengthen capital to restore financial stability. Without prompt action, the risk to ongoing viability increases.

RRM WAREHOUSING LIMITED - Analysis Report

Company Number: 13937837

Analysis Date: 2025-07-29 20:58 UTC

Financial Health Assessment for RRM WAREHOUSING LIMITED

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1. Financial Health Score: D

Explanation:
The company currently shows significant financial distress with net liabilities of £180,001 and a substantial loss of £204,793 for the year ended 28 February 2024. This negative equity position and operating loss indicate serious symptoms of financial strain. However, the company maintains active trading status with ongoing operations and no overdue filings, suggesting some operational continuity. The score reflects a company in financial distress, requiring urgent attention to restore health.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Net (Liabilities)/Assets	-£180,001	Negative net worth ("balance sheet anemia") indicating insolvency on paper.
Profit/Loss for Period	-£204,793	Significant operating loss ("financial hemorrhage").
Current Assets	£133,404	Includes cash, debtors, and stock; moderate liquidity.
Current Liabilities	£355,856	High short-term obligations ("heavy short-term debt burden").
Net Current Assets (Working Capital)	-£222,452	Negative working capital ("cash flow congestion") indicating difficulty meeting short-term debts.
Cash at Bank	£22,294	Low cash reserves ("weak cash buffer").
Trade Debtors	£53,992	Moderate receivables; potential for cash inflow if collected timely.
Trade Creditors	£40,428	Payables are significant but not excessive relative to debtors.
Tangible Fixed Assets	£42,451	Some investment in equipment and vehicles; relatively stable assets.
Number of Employees	6	Small workforce consistent with small company scale.
Going Concern Note	Material uncertainty disclosed, but management expects to continue operations.

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3. Diagnosis

RRM WAREHOUSING LIMITED is currently in a state of financial distress, akin to a patient showing signs of serious illness but still responsive to treatment. The company’s balance sheet reveals a negative net asset position, reflecting accumulated losses and liabilities exceeding assets. The operating loss of over £200k is a symptom of ongoing cash flow problems and potential operational inefficiencies or revenue shortfalls.

The negative working capital indicates that the company’s short-term liabilities significantly exceed current assets, creating a liquidity crunch that could threaten the ability to meet creditor demands promptly. Cash reserves are low, limiting the company's "financial stamina" to endure prolonged stress without external support.

However, the business remains active with no overdue filings and ongoing operations, suggesting management is attempting to manage the crisis. The going concern statement acknowledges material uncertainty but expresses confidence in survival, implying some remedial measures or external support may be in place.

The company's financial "pulse" is weak and irregular, and without intervention, the prognosis worsens. The presence of related party transactions and director loans may reflect attempts to provide interim relief.

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4. Recommendations

To improve its financial wellness and restore a healthy financial "heartbeat," RRM WAREHOUSING LIMITED should consider the following actions:

1. Liquidity Improvement:

   • Accelerate collection of trade debts to boost cash inflows.
   • Negotiate extended payment terms with creditors to reduce immediate cash outflows.
   • Explore short-term financing options or director loans to alleviate cash shortages.

2. Cost Management:

   • Review operating expenses and overheads to identify cost-cutting opportunities.
   • Assess the efficiency of asset utilization, including machinery and vehicles, to optimize operational costs.

3. Profitability Enhancement:

   • Reassess pricing strategies and contract terms to improve margins.
   • Explore new revenue streams or increase sales efforts to reverse loss-making trends.

4. Capital Structure:

   • Consider capital injection from shareholders or new investors to restore positive net assets.
   • Evaluate potential restructuring options to reduce liabilities or renegotiate debt.

5. Governance and Monitoring:

   • Improve financial reporting and cash flow forecasting to detect distress symptoms early.
   • Engage professional advice for turnaround strategies and potential insolvency risk management.

6. Going Concern Vigilance:

   • Continuously monitor liquidity and solvency ratios.
   • Prepare contingency plans should the financial condition deteriorate further.

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Medical Analogy Summary

The company exhibits "symptoms of financial distress" with a "weak pulse" indicated by negative net assets and operating losses. The "working capital anemia" suggests a liquidity crisis, impairing its ability to pay short-term debts. Immediate interventions ("treatment plans") focusing on liquidity, cost control, and capital restructuring are necessary to "stabilize the patient" and improve its financial health prognosis.

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