Company Number: 12825404

Analysis Date: 2025-07-20 16:39 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   DAILY DOSE COFFEE LTD is an active private limited company operating in the unlicensed restaurants and cafes sector. The company has demonstrated ongoing operations since incorporation in 2020. However, the latest financial year (ending January 2024) shows a significant deterioration in working capital and net assets compared to prior years, indicating some financial stress. The increase in current liabilities, notably corporation tax and other creditors (which includes director loans), has outpaced current assets, resulting in a net current liability position. This raises concerns about short-term liquidity and the company’s ability to meet immediate obligations without additional financing or improved cash flow. Approval is recommended subject to close monitoring of cash flow, creditor management, and confirmation of ongoing profitability and operational improvements.

2. Financial Strength:

• Net assets declined sharply from £27,557 (2023) to £9,868 (2024), indicating erosion of equity likely due to losses or increased liabilities.
• Fixed assets increased modestly, reflecting capital expenditure, but tangible assets remain modest at £17k.
• Net current assets swung from a healthy £15,646 surplus to a £2,934 deficit, driven primarily by a doubling of current liabilities from £19,384 to £35,689.
• The company carries a deferred tax liability of £4,267, consistent with prior years, and no long-term debt is evident.
• Share capital is minimal (£100), so financial resilience heavily depends on retained earnings and cash flow.
  Overall, the balance sheet shows weakening financial strength with rising short-term obligations exceeding current assets, reducing the margin of safety.

3. Cash Flow Assessment:

• Cash at bank is steady at approximately £30k, slightly increased from prior year, which provides some liquidity buffer.
• However, trade debtors are minimal (£970), and stock levels have reduced significantly, possibly reflecting tighter inventory management or reduced sales.
• The substantial increase in current liabilities, including significant amounts owed to directors (£6,558) and higher tax payables, suggests pressure on operating cash flow.
• The company’s working capital deficit and increasing creditor balances imply potential cash flow strain in meeting short-term liabilities.
• The director loan is interest-free and repayable on demand, which may provide some flexibility, but reliance on related party funding is a credit risk factor.
  Liquidity is currently marginal and needs careful management to avoid payment delays or further reliance on director advances.

4. Monitoring Points:

• Track monthly cash flow and working capital movements to ensure timely payment of creditors and tax obligations.
• Monitor changes in current liabilities, especially related party loans, to assess funding sustainability.
• Review profitability and net asset trends in upcoming accounts to confirm recovery or further deterioration.
• Confirm ongoing compliance with filing deadlines and absence of director disqualifications or adverse conduct.
• Maintain dialogue with management regarding any planned capital injections or restructuring to strengthen liquidity.