Company Number: 13445620

Analysis Date: 2025-07-20 14:58 UTC

1. Credit Opinion: DECLINE

Red Tree Living Ltd presents a weak credit profile. The company demonstrates negative net assets and shareholders’ funds of approximately -£8,311 as of the latest financial year ending June 2024, indicating an erosion of equity and a balance sheet deficit. The consistent negative equity position over multiple years signals financial distress. Current liabilities exceed current assets by a significant margin, with current assets showing a negative balance (£-8), reflecting potential difficulties in meeting short-term obligations. The company’s fixed assets have been declining, and total liabilities remain high, including substantial long-term creditors. Additionally, the company is very young (incorporated in 2021) with minimal operating history and only one reported employee, limiting the strength of its operational track record. The lack of profitability information due to micro-entity reporting exemptions restricts insight into earnings capacity. Given these factors, the company’s ability to service debt or credit facilities is questionable without significant financial restructuring or external support.

2. Financial Strength:

The balance sheet as at June 2024 reveals a fragile financial position. Fixed assets have declined from £8,400 in 2021 to £4,200 in 2024, which may indicate asset disposals or depreciation exceeding reinvestment. Current assets have collapsed to negative territory (-£8), likely due to accounting adjustments or overdrawn bank accounts, while current liabilities remain at £6,165. The net current asset position is deeply negative (-£6,173), signaling poor working capital management or liquidity issues. Total liabilities, including creditors falling due after more than one year (£6,338), outweigh total assets, resulting in negative net assets of -£8,311. Shareholders’ funds are also negative, which undermines the company’s solvency. The company’s micro-entity status limits disclosure but the available data shows a business under financial duress.

3. Cash Flow Assessment:

The negative current assets and high current liabilities imply constrained liquidity and working capital deficits. The company’s ability to generate cash internally from operations is uncertain given no reported income statement and consistent decline in asset base. The low employee count suggests a lean operation but may also reflect limited operational scale. The lack of cash or equivalents on the balance sheet and significant short-term creditors create risk around meeting immediate financial obligations. Without clear evidence of positive cash inflows or external funding, liquidity risk is elevated.

4. Monitoring Points:

• Monitor any forthcoming accounts or management accounts for signs of improved profitability or cash flow.
• Watch for changes in current asset levels and current liabilities to assess working capital trends.
• Review any restructuring, capital injections, or refinancing activities aimed at restoring equity and liquidity.
• Track director appointments and any changes in management strategy that might impact financial stability.
• Observe payment behavior on existing credit facilities or trade payables for signs of financial stress.