RMS CORPORATION LTD

Executive Summary

RMS Corporation Ltd shows improving equity but faces liquidity challenges due to negative working capital and reduced cash reserves. While the company is operationally growing with increased employees and retained earnings, its ability to meet short-term obligations is constrained. Conditional credit approval is recommended with stringent monitoring of cash flow and debtor management to mitigate liquidity risk.

RMS CORPORATION LTD - Analysis Report

Company Number: 13277646

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

1. Credit Opinion: CONDITIONAL APPROVAL
   RMS Corporation Ltd shows moderate financial progress with improving net asset position, but current liabilities exceed current assets, resulting in negative working capital. The company’s ability to meet short-term obligations is constrained, so credit approval should be conditional on monitoring liquidity closely and potentially requiring additional security or guarantees. The presence of tangible fixed assets and increasing retained earnings suggest some financial stability, but cash flow pressures and reliance on debtor collections pose risks.

2. Financial Strength:

• Net assets have increased from £5,297 in 2023 to £32,531 in 2024, reflecting improved profitability and equity base.
• Fixed assets stand at £92,442, indicating some investment in long-term resources.
• Share capital is nominal (£100), typical for a small private company, with earnings retained in reserves.
• The company is classified as small and active, with growing employee numbers (2 to 4).
• However, net current liabilities of £59,911 highlight a liquidity mismatch that weakens short-term financial strength.

3. Cash Flow Assessment:

• Cash balances decreased from £540,549 to £313,881, a significant reduction that may impact operational flexibility.
• Debtors increased from £604,236 to £769,545, suggesting extended credit terms or slower collections, which stresses working capital.
• Current liabilities remain high at £1,143,337, exceeding current assets by £59,911, indicating potential difficulty in settling short-term debts without drawing on fixed assets or external funding.
• Negative working capital and declining cash reserves warrant close scrutiny of cash conversion cycle and collection efficiency.

4. Monitoring Points:

• Liquidity ratios including current ratio and quick ratio to detect further deterioration in working capital.
• Debtor aging reports to assess credit risk and collection delays.
• Cash flow forecasts to ensure operational expenses and liabilities are covered.
• Profitability trends and retained earnings growth to confirm sustainability.
• Any changes in contract terms or market conditions affecting real estate management and letting activities.
• Director actions on cash management and credit control policies.