SUGAR THEORY LTD

Executive Summary

Sugar Theory Ltd is currently financially weak with negative equity, no cash reserves, and increasing reliance on debt including director loans. Its liquidity position deteriorated over the last year, limiting its ability to service debt and meet short-term obligations. Given these factors, credit approval is not recommended without significant improvement in cash flow and balance sheet strength.

SUGAR THEORY LTD - Analysis Report

Company Number: 13222478

Analysis Date: 2025-07-29 14:06 UTC

1. Credit Opinion: DECLINE
   Sugar Theory Ltd shows persistent negative net assets (£-4,032) with liabilities exceeding assets. The company has no cash or current assets at the latest year-end and a significant amount of bank loans (£18,194) falling due after more than one year. Working capital has deteriorated to zero from positive in previous years, indicating liquidity stress. Despite being active and filing timely accounts, the business is not generating sufficient short-term resources to cover liabilities. There is no evidence of profitability or cash flow improvement. This weak financial position and lack of liquidity pose a high credit risk, making approval for new credit facilities unsuitable at this time.

2. Financial Strength:
   The balance sheet reveals tangible fixed assets of £14,162 but these are outweighed by current and long-term liabilities. Current liabilities are £13,713 with no current assets to offset them in the latest year, resulting in zero net current assets. Bank loans of £18,194 contribute to a negative shareholder equity position. The negative retained earnings reflect cumulative losses. Overall, the company’s capital structure is weak, with shareholder funds negative and balance sheet solvency impaired.

3. Cash Flow Assessment:
   Cash at bank and in hand dropped from £1,215 to zero over the last year, indicating cash depletion. Debtors and accrued income that previously supported working capital are now nil. The company relies on director loans and bank loans to meet obligations; director loans of £11,884 are current liabilities. The absence of liquid assets to cover short-term liabilities signals poor liquidity and working capital management, raising concerns over the ability to meet immediate financial commitments.

4. Monitoring Points:

• Cash flow trends and ability to rebuild cash reserves
• Changes in net current assets and working capital position
• Profitability indicators and any turnaround in retained earnings
• Debt repayment schedule adherence, especially bank loan servicing
• Director loans and any further related party funding
• New business or revenue generation developments to improve liquidity