RKA 18 LTD

Executive Summary

RKA 18 LTD is a very small, active UK company operating in freight transport and wholesale sectors. Its financial health shows early warning signs due to low liquidity and declining equity, which could impair its ability to meet short-term obligations. Focused efforts to improve cash flow management, strengthen capital, and control costs are essential to stabilize and grow the business.

RKA 18 LTD - Analysis Report

Company Number: 14281334

Analysis Date: 2025-07-29 20:58 UTC

Financial Health Assessment Report: RKA 18 LTD

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1. Financial Health Score: D

Explanation:
RKA 18 LTD’s financial health is currently fragile. While the company remains active with positive net assets, the minimal scale of its financial base and declining net current assets signal early symptoms of distress. This micro-entity shows limited working capital and very modest equity, making it vulnerable to cash flow shocks or unexpected liabilities. Improvement is necessary to build a more resilient financial foundation.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	1,508	550	Small increase but still extremely low cash & short-term assets
Current Liabilities	1,333	85	Sharp increase, indicating growing short-term obligations
Net Current Assets	175	465	Significant decrease, signals weakening working capital
Total Net Assets	175	465	Decline in equity base, indicating possible losses or withdrawals
Shareholders’ Funds	175	465	Mirrors net assets; very limited capital cushion
Average Employees	1	-	Minimal workforce suggesting a very small operational scale

Interpretation of Vital Signs:

• Healthy cash flow is crucial for survival, but with current assets barely covering liabilities, the company’s liquidity is strained.
• The sharp rise in current liabilities compared to assets suggests symptoms of financial stress, possibly due to increased short-term debt or unpaid bills.
• The decline in net assets and shareholders’ funds points to erosion of financial resilience, reducing ability to absorb shocks.
• As a micro-entity, the company operates on a very lean scale; its financial indicators reflect a startup or nascent business still establishing its footing.

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3. Diagnosis

RKA 18 LTD is in an early stage of financial development, characterized by very modest asset base and thin equity capital. The significant increase in current liabilities relative to assets over the last year is the primary symptom indicating potential liquidity challenges. This could be due to increased operational expenses or delayed payments from customers, common in freight transport and wholesale sectors.

The company’s working capital — the financial “heartbeat” — is weak and declining, a warning sign that cash inflows may not be sufficient to meet short-term obligations without external support or operational improvements. The small equity base (net assets) means there is little buffer for absorbing losses or investing in growth.

The single director and sole shareholder structure implies concentrated decision-making control, which can be beneficial for agility but also risks limited oversight. No off-balance-sheet liabilities or employee numbers beyond one suggest the business is small and simple but also vulnerable.

In summary, the company exhibits early symptoms of financial distress typical in micro-businesses: low liquidity, rising short-term debt, and shrinking equity. However, it is not yet in crisis; with prudent management, these issues can be addressed before they develop into acute problems.

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4. Recommendations

To improve financial wellness, RKA 18 LTD should consider the following actions:

1. Strengthen Liquidity Management:

   • Improve cash flow forecasting to anticipate shortfalls.
   • Accelerate receivables collection and negotiate better payment terms with suppliers to reduce current liabilities.
   • Consider short-term credit facilities cautiously to bridge cash flow gaps.

2. Enhance Capital Base:

   • Inject additional equity or seek small-scale investment to increase shareholders’ funds and provide a buffer against losses.
   • Retain earnings within the company rather than distributing dividends until financial health improves.

3. Operational Efficiency:

   • Review cost structure, especially freight and wholesale operational expenses, to identify savings.
   • Explore increasing sales volume or diversifying revenue streams within core SIC activities (freight transport, wholesale alcoholic beverages).

4. Financial Monitoring and Reporting:

   • Maintain timely and accurate financial records to detect early signs of distress.
   • Regularly review financial ratios like current ratio, quick ratio, and working capital to stay ahead of liquidity issues.

5. Strategic Planning:

   • Develop a business continuity plan addressing how to handle potential cash shortages or unexpected expenses.
   • Consider professional financial advice or mentoring to improve financial controls and business strategy.

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