RD CONTROLS LTD

Executive Summary

RD Controls Ltd is a newly established engineering company with a healthy initial balance sheet and positive net assets, but limited trading history. Liquidity is tight due to low cash reserves relative to current liabilities, relying heavily on debtor collections. Conditional credit approval is advised with ongoing monitoring of cash flow, debtor management, and profitability to confirm sustainable creditworthiness.

RD CONTROLS LTD - Analysis Report

Company Number: 15341331

Analysis Date: 2025-07-20 15:19 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   RD Controls Ltd is a newly incorporated private limited company operating in the engineering sector. The company shows positive net assets and working capital, indicating initial financial stability. However, as it was incorporated only in December 2023 and has filed its first accounts for the period ending December 2024, there is limited operational history to fully assess ongoing creditworthiness. Conditional approval is recommended, subject to monitoring future trading performance and cash flow generation to confirm repayment capacity.

2. Financial Strength:

• Net assets stand at £23,919, supported primarily by fixed assets (£22,058) and positive net current assets (£1,861).
• The balance sheet shows no long-term liabilities, which reduces financial risk.
• Shareholders’ funds of £23,919 reflect retained earnings, suggesting the company has generated some profit or capital injection since inception.
• The modest share capital (£2) is typical for a small private company but puts emphasis on the retained earnings for financial strength.
• The company’s asset base is concentrated in motor vehicles subject to depreciation, which may limit collateral value over time.

3. Cash Flow Assessment:

• Cash at bank is low (£2,302) relative to current liabilities (£27,923), signaling tight liquidity.
• Trade debtors (£20,726) and other debtors (£6,756) make up the bulk of current assets, indicating a reliance on timely collections to meet short-term obligations.
• Current liabilities include significant corporation tax (£9,992) and taxes/social security (£7,901), reflecting ongoing operational costs and tax commitments.
• Net current assets are positive but slim (£1,861), so working capital management will be critical for maintaining liquidity.
• Absence of debt financing reduces interest burden but also limits external liquidity reserves.

4. Monitoring Points:

• Monitor debtor days closely to ensure receivables convert to cash promptly and maintain liquidity.
• Track profitability trends in future accounts to confirm the company can generate sufficient earnings to cover tax and operating expenses.
• Review cash balances regularly to avoid liquidity shortfalls, especially given the high current liabilities.
• Watch for changes in tax liabilities and social security costs, as these are substantial components of current liabilities.
• Observe any new borrowings or credit facilities that might affect financial leverage and repayment capacity.
• Assess management’s ability to maintain the asset base and control costs as the company scales.