Company Number: SC705509

Analysis Date: 2025-07-29 18:47 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   HI TEA LT LTD shows modest net assets and micro-entity scale operations with a negative working capital position, indicating liquidity constraints. The company is active and compliant with filings, but current liabilities exceed current assets by £4,430 as of April 2024, which poses a short-term liquidity risk. The director holds full ownership and appears stable with no adverse records. Credit may be extended if supported by personal guarantees or additional collateral, and provided close monitoring is maintained on cash flows and receivables to avoid payment difficulties.

2. Financial Strength:
   The balance sheet reveals fixed assets of £21,550 and net assets of £17,120 as of the latest accounts. Shareholders’ funds have declined from £21,619 in 2023 to £17,120 in 2024, indicating some erosion of equity. The company’s size remains micro, with stable but limited capital. The negative net current assets reflect a reliance on longer-term assets to support operations. Overall, the financial position is modest and vulnerable to shocks, but not critically weak.

3. Cash Flow Assessment:
   Current assets stand at £6,879 while current liabilities are £11,309, resulting in a net current liability of £4,430. This negative working capital suggests potential cash flow pressure to meet short-term obligations. The company’s average employee count has decreased slightly, which might relate to cost control efforts. There is no direct cash flow statement available, but the current asset composition and liabilities imply a need for improved liquidity management, possibly through better receivables collection or short-term financing.

4. Monitoring Points:

• Watch cash conversion cycle and liquidity ratios closely, ensuring current liabilities do not outpace current assets further.
• Monitor shareholder funds for further declines which may affect solvency.
• Track any overdue payments or late supplier settlements.
• Review director’s financial commitments and potential for personal support if required.
• Monitor employee numbers and cost structure for sustainability.