RK IMPROVEMENTS LIMITED

Executive Summary

RK IMPROVEMENTS LIMITED is an early-stage construction micro-entity showing modest growth and positive working capital but with a thin equity base and significant long-term liabilities. The company can meet short-term obligations but carries financial leverage that warrants cautious and conditional credit approval. Close monitoring of liquidity, creditor terms, and operational performance is essential to manage credit risk effectively.

RK IMPROVEMENTS LIMITED - Analysis Report

Company Number: 14007080

Analysis Date: 2025-07-29 20:50 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   RK IMPROVEMENTS LIMITED is a very young micro-entity company operating in the domestic construction sector. The company shows initial growth with net assets increasing modestly from £859 (FY 2023) to £2,387 (FY 2024). However, the presence of significant non-current liabilities due after more than one year (£35,315) compared to relatively low equity signals leveraged funding, which requires caution. The single director and 100% owner is a builder by occupation, indicating industry experience but limited corporate structure. The company can service short-term liabilities as current assets exceed current liabilities, but the overall financial footprint is small and early-stage. Credit approval is possible but should be conditional on ongoing monitoring of cash flow and debt servicing capacity.

2. Financial Strength:
   The balance sheet shows fixed assets of £25,994 acquired during FY 2024, indicating investment into operational capability. Current assets rose substantially to £38,267, with current liabilities at £26,559, resulting in a positive net working capital of £11,708. However, the company carries £35,315 in long-term creditors, which almost equals total assets less current liabilities (£37,702), leaving net assets low at £2,387. The equity base is thin relative to total liabilities, suggesting limited financial buffer. The micro-entity’s financial position is fragile but improving, with no audit requirement under micro-entity rules.

3. Cash Flow Assessment:
   Current assets exceed current liabilities by a fair margin, implying the company can meet short-term obligations. The increase in current assets suggests improved liquidity, possibly from receivables or cash. However, the significant long-term creditors could impact future liquidity if repayments are due or if refinancing is required. The presence of only one employee (likely the director) keeps fixed costs low. Cash flow stability is uncertain given the company’s infancy and capital structure; thus, detailed cash flow forecasting and monitoring of creditor repayment terms are recommended.

4. Monitoring Points:

• Track quarterly cash flow performance and working capital trends to ensure liquidity remains positive.
• Monitor repayment schedule and covenants related to long-term creditors to avoid liquidity strain.
• Review turnover and profitability when available to assess operational viability beyond balance sheet metrics.
• Maintain updated director and shareholder information and ensure continued compliance with filing deadlines.
• Assess any changes in business scale, staffing, or capital investment that could affect credit risk.