It has no doubt been a long, hard road for RadioShack (NYSE:RSH). After watching the company flail and fail over the last ten years, it has come down to a point where the struggling electronics retail chain is running out of options.

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Part of RadioShack's Super Bowl commercial poked fun at the store's recent failure to adapt.

After the company's struggles continued to make headlines, RadioShack tried to set itself up for a comeback by launching an ad that playfully poked fun at itself during last year's Super Bowl. The ad was a hit and the stock soared the next day. Unfortunately, it would seem the company didn't actually have any tangible business plan to back up the public relations victory. RadioShack stock began to slump once again.

Looking back to the "inventors" that started it all
On June 4th, we were offered a press release from RadioShack that makes it clear they're once again going for the coveted home inventor or small business owner. The company is pairing up with PCH, a company that specializes in supporting inventors and start-ups, to try and work out a deal that would allow those in need of RadioShack's toolkit of products direct access. If you recall, investors and home gadget makers during the computer and electronics boom of the 80's were RadioShack's primary source of business at one point.

That was long before the world discovered that they could easily order the obscure parts and pieces they needed via the Internet. Since then, RadioShack stores have become somewhat deserted territories. 

Direct competitors like Best Buy (NYSE:BBY) and Amazon (NASDAQ:AMZN) have both significantly outperformed RadioShack over the last several years. Over the last year, while RadioShack dropped 59% of its value, Amazon has popped 23% and Best Buy has risen 5%.  Best Buy has offered a far greater range of electronics inventory and selection than RadioShack had ever offered and Amazon appeals to those who are looking for specific electronic gadgets and parts that you would have had to go to RadioShack for back in the 80's.

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Amazon has been one of many retail companies to significantly outperform RadioShack.

Best Buy knows a bit around turnarounds. They've been on a mission to improve efficiency in their own stores since late in 2012. The company's main premise behind their turnaround is $1 billion in cost cutting, which the retailer hoped it would help it lower prices. Additionally, a focus of Best Buy's continues to be online sales; an area that RadioShack needs desperate improvement in.

RadioShack's failure to adapt to an online model is one of the major reasons that the company has fallen on tough times in the last few years.

The balance sheet in question
Most recently, the company's plans to continue closing retail locations were vetoed by company creditors. This led to the most current wave of doubt that hangs over the head of both the company, and its stock. 

The interesting thing about RadioShack is that since the market has completely given up on the company, it's trading at a price that is actually less than what the company is worth on paper.  

RadioShack's press release after its last earnings noted the $614 million in debt that the company is carrying, which is around 10 times the amount of cash the company has on hand:

The Company ended the quarter with total liquidity of $423.7 million at May 3, 2014, including $61.8 million in cash and cash equivalents and $361.9 million of availability under the 2018 Credit Agreement. This availability is net of letters of credit totaling $67.8 million outstanding at May 3, 2014.  The Company's total debt was $614.5 million at May 3, 2014, which matures between 2018 and 2019. Subsequent to the end of the quarter, the Company drew on the 2018 Credit Facility for general corporate purposes.

According to Yahoo Finance, the company currently has $0.61 in cash per share and a book value of $0.72. The company is trading above these values, near $1.15 per share.

The risk is real
The main question here is whether or not this deal is going to do enough to help spark RadioShack toward a cash flow neutral position again. RadioShack's model looks similar to that of retailer Brookstone. Brookstone, a privately held retail chain that focused on gadgets and massage chairs, filed for bankruptcy protection earlier this year.  

This leads the Foolish investor to, of course, ask: What are the capital expenditures that RadioShack is going to be forced to take on for its part in this deal? Similarly, how much business is PCH going to have to share with RadioShack for this program to have some sort of traction?

If the company can show a semblance of cash flow neutrality, the market is likely to reward the share price. This is all theoretical, however. In reality, the company must stop burning through its cash, which it has not done. With significant risk always comes significant reward. An investment in RadioShack at this point certainly isn't for the faint of heart, as the company remains on life support for the time being.  

Christopher Irons has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.