Company Number: 14226415

Analysis Date: 2025-07-20 12:11 UTC

1. Risk Rating: MEDIUM

Justification: While MUG COFFEE LTD is an active private limited company with timely filings and no overdue accounts or confirmation statements, its recent financials show a significant deterioration in net current assets and total net assets compared to the prior year. The company’s net current assets have moved from a positive £21,219 in 2023 to a negative £2,407 in 2024, and net assets have declined from £13,009 to £6,003. This decline indicates increasing short-term liabilities relative to current assets, suggesting potential liquidity pressures. However, the company remains solvent on a net asset basis and has no indications of insolvency or formal distress proceedings.

2. Key Concerns:

• Liquidity Risk: The current liabilities (£14,244) now exceed current assets (£11,837), indicating a working capital deficit which could challenge short-term obligations.
• Declining Net Assets: A near 54% drop in net assets year-on-year may reflect operational or financial difficulties that need further exploration.
• Limited Scale and Resources: As a micro-entity with only 2 employees and modest fixed assets, the company may have limited financial and operational resilience to absorb shocks.

3. Positive Indicators:

• Compliance: No overdue filings or confirmation statements, demonstrating good regulatory compliance and governance.
• Ownership and Control: Single shareholder/director with full control can facilitate swift decision-making and clear accountability.
• Stability of Fixed Assets: Fixed assets have remained fairly stable, indicating no distress sales or impairment write-downs.

4. Due Diligence Notes:

• Investigate the reasons for the marked reduction in net current assets and net assets—review profit and loss accounts, cash flow statements, and creditor aging.
• Confirm the nature and terms of current liabilities to assess repayment risk and any refinancing needs.
• Review operational performance and market conditions affecting the licensed restaurant sector (SIC 56101) to assess sustainability.
• Assess any contingent liabilities or off-balance sheet obligations not captured in micro-entity accounts.
• Verify director’s experience and management capabilities given sole control.