RUBY ROAD LIMITED

Executive Summary

RUBY ROAD LIMITED has successfully transitioned from a negative equity position to a profitable and solvent status, reflecting strong operational performance. However, significant short-term liabilities and negative working capital highlight liquidity risks that require focused management attention. With prudent cash flow and debt strategies, the company is positioned for sustained financial wellness.

RUBY ROAD LIMITED - Analysis Report

Company Number: 13549446

Analysis Date: 2025-07-29 19:23 UTC

Financial Health Assessment of RUBY ROAD LIMITED

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1. Financial Health Score: B

Explanation:
RUBY ROAD LIMITED shows a solid improvement in its financial condition over the recent year, turning from net liabilities in 2022 to positive net assets in 2023. With a strong asset base driven by substantial investments and a significant profit recorded for the year, the company demonstrates signs of financial recovery and growth. However, the company carries high levels of both short and long-term liabilities, which present ongoing financial risks. The score B reflects a generally healthy financial state but with caution advised due to these liabilities.

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2. Key Vital Signs

Metric	Value (2023)	Interpretation
Net Assets	£4.28 million	Positive net worth indicates the company’s assets exceed liabilities, a sign of financial health.
Profit for the Year	£6.31 million	Indicates strong profitability and operational success during the year.
Current Assets	£2.03 million	Indicates available short-term resources including cash and receivables.
Current Liabilities	£47.19 million	Very high short-term obligations compared to assets, leading to a large net current liability.
Net Current Assets (Working Capital)	-£45.15 million	Negative working capital signals potential liquidity challenges to meet short-term debts.
Long-term Liabilities	£63.24 million	Substantial long-term debt burden which could pressure future cash flows.
Investment Assets	£112.6 million	Large investment holdings provide a strong asset base but may reduce liquidity.
Cash at Bank	£1.75 million	Healthy cash balance, a positive sign of liquidity but small relative to liabilities.
Turnover (Reported)	£5.81 million	Revenue showing growth from previous period, supporting profit generation.
Employee Count	16 average	Moderate staffing level indicating operational scale.

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3. Diagnosis: Financial Condition Analysis

RUBY ROAD LIMITED presents the symptoms of a business in recovery and growth with a substantial turnaround from negative equity to a positive net asset position within a year. The company's profitability (a profit of over £6 million in 2023) reflects strong underlying business operations or successful investments.

However, the company is experiencing significant financial stress symptoms, specifically in the form of:

• Severe working capital deficit: Current liabilities exceed current assets by over £45 million. This “cash flow congestion” is a critical symptom that could strain daily operations and payment cycles.
• High leverage: Long-term liabilities of over £63 million indicate heavy borrowing or financial obligations that must be serviced, reducing financial flexibility.
• Concentration of assets in investments: While investments of £112 million provide an asset cushion, these may not be as liquid as cash, potentially complicating quick access to funds.

The company’s reported going concern status and profit suggest that management has confidence in ongoing operations and ability to meet obligations. Yet, the large scale of liabilities relative to liquid assets and working capital deficit highlight ongoing financial risk and the need for careful cash flow management.

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4. Recommendations: Improving Financial Wellness

1. Enhance Liquidity Management:

   • Develop a robust cash flow forecast to monitor and manage short-term payments and receipts.
   • Explore options to convert some investment assets into more liquid forms if possible to ease working capital pressure.

2. Debt Restructuring and Reduction:

   • Engage with creditors to negotiate extended payment terms or refinancing options to reduce the burden of current liabilities and long-term debt.
   • Evaluate the cost of finance and consider replacing expensive debt with less costly alternatives.

3. Increase Operating Cash Flow:

   • Focus on improving debtor collections and inventory turnover to reduce working capital needs.
   • Optimize operational efficiency to maintain or increase profitability.

4. Monitor and Control Expenses:

   • Continue careful cost control to sustain profit margins and avoid unnecessary financial strain.

5. Regular Financial Health Reviews:

   • Implement periodic financial diagnostics similar to this assessment to track improvements or warning signs early.

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Medical Analogy Summary

RUBY ROAD LIMITED's financial health shows a heartening recovery pulse with profitable operations and a shift to positive net assets—a sign of a company regaining strength after a period of distress. However, the “symptoms of liquidity distress” caused by a significant working capital deficit and high debt levels require vigilance and proactive treatment to avoid future financial complications. The prognosis is cautiously optimistic, provided management follows through on liquidity management and debt reduction strategies.

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