DREAM WELSH CALIFORNIA LIMITED

Executive Summary

Dream Welsh California Limited exhibits ongoing negative equity and significant current liabilities exceeding current assets, leading to poor liquidity and high credit risk. The company's financial position is fragile, with limited cash resources and substantial creditor exposure. Due to these factors, credit approval is not advisable without substantial improvement in financial stability and cash flow generation.

DREAM WELSH CALIFORNIA LIMITED - Analysis Report

Company Number: 13587758

Analysis Date: 2025-07-29 13:41 UTC

1. Credit Opinion: DECLINE
   Dream Welsh California Limited shows significant financial weakness, with negative net assets and shareholders’ funds for multiple consecutive years, now at -£1,951 as of August 2024. The company has net current liabilities of £106,715 and limited cash (£573), indicating poor liquidity and an inability to cover short-term obligations. The addition of a £10,000 long-term creditor further burdens the balance sheet. Without profit and loss details, the negative equity and high current liabilities suggest ongoing losses or insufficient revenues, raising concerns about debt servicing capacity and business viability. Given these factors, extending credit poses a high risk and is not recommended.

2. Financial Strength:
   The company’s balance sheet shows tangible fixed assets increased significantly to £114,764, mainly freehold land and buildings with no depreciation charged, which may reflect recent property acquisition or capitalisation. However, these assets are overshadowed by current liabilities of £107,288 and additional £10,000 long-term creditors, resulting in net liabilities of £1,951. The persistent negative equity and net current liabilities highlight weak capitalisation and poor solvency. The absence of retained earnings accumulation and continuing negative shareholders’ funds indicate insufficient internal financing or external injections to stabilise financial health.

3. Cash Flow Assessment:
   Cash at year end is minimal at £573, insufficient to cover any part of the current liabilities totaling over £107k. The large negative net current assets position suggests working capital deficits and difficulty in meeting short-term payables. Without evidence of positive operating cash flow or external funding, the company faces liquidity stress. The operating cycle is likely constrained, and the ability to generate or access cash quickly appears limited. This creates significant risk for creditors relying on timely repayments.

4. Monitoring Points:

• Monitor quarterly or interim management accounts for operating cash flow trends and profitability improvements.
• Watch for reductions in current liabilities or increases in cash balances to strengthen liquidity.
• Track any additional capital injections or refinancing that could improve net asset position and solvency.
• Review directors’ plans for asset utilisation or sale to alleviate working capital shortages.
• Observe compliance with filing deadlines and any material changes in creditor terms or legal actions.