RTA LONDON LIMITED

Executive Summary

RTA London Limited shows critical symptoms of financial distress with negative net current assets and equity, and no cash reserves. The company depends heavily on its parent for liquidity support and must urgently improve cash flow management and consider recapitalization to restore financial health. Immediate action is needed to avoid escalating financial risks.

RTA LONDON LIMITED - Analysis Report

Company Number: 13802952

Analysis Date: 2025-07-29 17:30 UTC

Financial Health Assessment of RTA LONDON LIMITED

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1. Financial Health Score: D

Explanation:
RTA London Limited displays clear symptoms of financial distress characterized by persistent net current liabilities, negative shareholder funds, and zero cash reserves. These vital signs indicate a company struggling with liquidity and solvency, reliant on external support to continue operations. Without intervention, the prognosis remains guarded.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Current Assets	1,780	Very low current assets, primarily debtors, with no cash reserves—a weak liquidity position.
Cash	0	Absence of cash means no immediate liquid resources to cover short-term obligations.
Debtors	1,780	Receivables present, but collection timing and quality unknown—potential cash flow risk.
Current Liabilities	19,712	Substantial short-term debts exceeding current assets by a large margin—liquidity symptoms.
Net Current Assets (Working Capital)	-17,932	Negative working capital suggests inability to cover short-term obligations from liquid assets.
Shareholders’ Funds (Equity)	-17,933	Negative equity indicates accumulated losses or funding deficits, a sign of solvency issues.

Additional Context:

• The company is categorized as a small private limited company in wholesale of perfume and cosmetics (SIC 46450).
• It has no employees, suggesting minimal operational scale or possibly outsourced functions.
• The financials are unaudited but prepared under applicable accounting standards.
• The going concern note reveals dependence on the ultimate parent company, RTA Global B.V., for liquidity support.

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3. Diagnosis

Symptoms Analysis:

• Liquidity Crisis: The absence of cash and a large gap between current assets and current liabilities signal the company cannot meet its short-term obligations from its own resources. This is akin to a patient with dangerously low blood pressure—immediate support is critical to sustain life (operations).
• Solvency Concerns: Negative shareholders’ funds reflect prolonged losses or undercapitalization. The company’s "financial heart" is weak, unable to generate or retain sufficient profits to build equity.
• Dependence on Parent: The going concern statement explicitly states reliance on the parent company to settle liabilities, indicating external lifeline dependency. Without this, the company would face severe distress or insolvency.
• Stagnant or Declining Asset Base: Current assets have shrunk over the last year, while liabilities have increased significantly, suggesting worsening financial health.

Overall Diagnosis:
RTA London Limited is in a precarious financial state with symptoms resembling a chronic illness—ongoing deficits and liquidity shortages threaten business continuity without external intervention. The company is not generating enough cash flow internally, and its balance sheet shows structural weaknesses.

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4. Recommendations

1. Immediate Cash Flow Management:

   • Prioritize collection of outstanding receivables to improve liquidity.
   • Negotiate extended payment terms with creditors to reduce immediate cash outflows.
   • Explore short-term financing or cash injections from the parent company or other investors to stabilize operations.

2. Cost and Operational Review:

   • Assess operational expenses and overheads to identify cost-saving opportunities.
   • Consider restructuring or scaling down activities that do not generate positive cash flow.

3. Capital Restructuring:

   • Evaluate the possibility of recapitalization via equity injection from the parent or new shareholders to restore positive net assets.
   • Address accumulated losses through strategic financial planning to rebuild shareholder equity.

4. Financial Reporting and Oversight:

   • Even though audit exemption applies, consider voluntary external review or audit to increase confidence and transparency with stakeholders.
   • Implement robust financial controls and regular cash flow forecasting to monitor financial health proactively.

5. Strategic Business Review:

   • Reassess business model viability in the wholesale perfume and cosmetics sector.
   • Explore diversification or new revenue streams to improve profitability and reduce reliance on parent support.

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Executive Summary

RTA London Limited is currently experiencing significant financial strain, characterized by negative working capital, zero cash reserves, and negative equity, indicating serious liquidity and solvency challenges. The company is reliant on its parent entity for financial support to continue operations, highlighting an urgent need for cash flow management and capital restructuring. Without swift remedial actions, the company faces ongoing financial distress that threatens its viability.