RC ASSETS LIMITED

Executive Summary

RC ASSETS LIMITED is facing significant financial challenges, including severe liquidity issues and a negative net asset position, signaling financial distress. Immediate corrective actions focusing on improving cash flow, restructuring debt, and capital infusion are critical to stabilize the company’s financial health and ensure its ongoing viability.

RC ASSETS LIMITED - Analysis Report

Company Number: 13908331

Analysis Date: 2025-07-29 14:24 UTC

Financial Health Assessment for RC ASSETS LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits significant financial distress symptoms, including persistent negative net assets and worsening working capital position. While it remains active, its balance sheet shows a fragile state that requires urgent attention to avoid insolvency risks.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	156,579	Growth in fixed assets indicates investment in long-term real estate holdings, which is positive but illiquid.
Current Assets	1,466	Extremely low liquid assets signal poor short-term liquidity and inability to cover short-term obligations.
Current Liabilities	129,726	High short-term debts create pressure on cash flow and working capital management.
Net Current Assets	-128,260	Heavy negative working capital ("symptom of liquidity distress"), indicating inability to meet short-term obligations.
Total Assets Less Current Liabilities	28,319	Positive but marginally, showing some buffer after short-term debts are deducted from assets.
Creditors (Long-term)	37,905	Significant long-term liabilities adding to financial obligations.
Net Assets (Equity)	-9,586	Negative net assets ("symptom of balance sheet weakness") signify that total liabilities exceed total assets, a critical concern.
Shareholders' Funds	-9,586	Negative shareholder equity indicating accumulated losses or undercapitalization.

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3. Diagnosis

The financial "vital signs" for RC ASSETS LIMITED reveal several concerning symptoms:

• Liquidity Crisis: The company’s current assets are grossly insufficient compared to current liabilities, leading to a severely negative working capital position. This implies that the company may struggle to meet its immediate debts as they fall due, risking cash flow "collapse".

• Balance Sheet Weakness: Negative net assets indicate that the company’s total liabilities exceed its total assets, a critical warning sign of financial distress. This imbalance weakens creditor and investor confidence.

• Fixed Assets Growth vs. Liquidity: The company has increased fixed assets substantially in the latest year (from £53k to £156k), likely through investment in real estate (its primary SIC activity). While long-term asset growth can be positive, it also ties up cash and reduces liquidity, possibly exacerbating short-term financial strain.

• No Audit and Micro Entity Status: The company benefits from audit exemption as a micro entity, limiting external assurance on financials. This may affect stakeholder confidence.

• Ownership and Control: The majority shareholder holds 75-100% control, which may provide flexibility in decision-making but also concentrates risk.

Overall, the company shows symptoms akin to a patient suffering from a "chronic liquidity disorder" with "imbalanced capital structure." Without intervention, these conditions could lead to insolvency or forced restructuring.

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4. Recommendations

To improve financial wellness and stabilize the company’s financial health, the following actions are advised:

• Improve Liquidity:

  • Seek short-term financing or capital injections to bolster cash reserves and working capital.
  • Accelerate debtor collections and manage creditor payments to improve cash flow timing.
  • Consider liquidating non-core current assets, if any, to generate cash.

• Restructure Debt:

  • Negotiate with creditors to extend payment terms or convert short-term liabilities into longer-term debt, reducing immediate cash pressure.

• Capital Injection:

  • The negative net asset position suggests the need for equity capital infusion from shareholders or new investors to restore solvency and improve balance sheet strength.

• Cost Management:

  • Review and reduce operating expenses to conserve cash.
  • Avoid further large fixed asset acquisitions unless funded externally.

• Financial Monitoring:

  • Implement rigorous cash flow forecasting and financial controls to detect early signs of distress and react promptly.

• Professional Advice:

  • Engage professional advisors specializing in corporate restructuring to design a tailored turnaround plan.

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Medical Analogy Summary

RC ASSETS LIMITED is currently exhibiting "symptoms of financial distress" with a "liquidity deficiency" and "balance sheet imbalance," akin to a patient with low blood pressure and chronic anemia. Immediate "treatment" to improve cash flow and restore capital health is essential to avoid "organ failure" (insolvency).

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