RC NETWORKS LTD

Executive Summary

RC Networks Ltd is a micro telecommunications company with improving net assets but persistent negative working capital and liquidity reliance on director loans. While operationally active and compliant, the company’s limited short-term financial flexibility requires close monitoring of cash flow and creditor management. Conditional approval is recommended, contingent on continued director support and improved working capital management.

RC NETWORKS LTD - Analysis Report

Company Number: 13309881

Analysis Date: 2025-07-19 12:45 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   RC Networks Ltd is a very small, micro-entity operating in telecommunications since 2021. The company remains active and compliant with filing obligations, demonstrating basic governance. However, financial data shows persistent net current liabilities and reliance on director loans, indicating liquidity constraints. While net assets have improved significantly in the latest year, working capital remains negative at -£8,261. The unsecured, interest-free director loan balance fluctuates and remains material relative to total assets. The company’s ability to meet short-term obligations without additional external funding is limited. Approval is conditional on monitoring cash flow rigorously and ensuring continued director support or other liquidity sources.

2. Financial Strength:

• Total net assets improved markedly from £1,912 (2023) to £15,494 (2024), driven by increased fixed assets and current assets.
• The balance sheet shows negative net current assets (working capital deficit) of -£8,261, though this is an improvement from -£16,030 the prior year.
• Share capital is minimal (£10), typical for micro companies, with equity mainly reflecting retained earnings or revaluation.
• The company is capitalized primarily through equity and director loans rather than external debt.
• The balance sheet structure indicates modest asset base with liquidity risks due to current liabilities exceeding current assets.

3. Cash Flow Assessment:

• Negative working capital reflects potential difficulty in meeting short-term liabilities without additional cash inflows or director support.
• The director loan is unsecured, interest-free, and repayable on demand, which provides some flexibility but also risk if the director withdraws funds or demands repayment.
• Current liabilities increased significantly to £50,904, outpacing current assets of £42,643, highlighting liquidity pressure.
• No audit means cash flow details are limited; however, the sizeable creditor balance and reliance on director advances suggest tight operating cash flow.
• Close attention should be paid to debtor collection, creditor terms, and cash management practices.

4. Monitoring Points:

• Working capital trends and ability to reduce negative net current assets.
• Director loan balance movements and whether additional funding or repayments occur.
• Timeliness of creditor payments and any overdue liabilities.
• Profitability trends and retention of earnings to strengthen equity base.
• Any changes in business activity, contracts, or market conditions affecting cash flow.
• Compliance with filing deadlines remains satisfactory but should be maintained.