Company Number: 13889636

Analysis Date: 2025-07-20 18:36 UTC

1. Credit Opinion: DECLINE
   Tea J Homes Ltd is a recently incorporated private limited company engaged in buying, renovating, and selling property. The latest accounts show negative net assets (£-34,361) and a working capital deficit, with current liabilities (£170,692) exceeding current assets (£136,331). The company is reliant on continued financial support from its directors and funders to meet working capital needs, indicating limited internal cash generation. Given the negative equity position, weak liquidity, absence of operating cash flow, and the early stage of the business, the ability to service external debt or credit facilities without director support is questionable. Therefore, credit approval is not recommended at this stage.

2. Financial Strength:
   The company exhibits balance sheet weakness characterized by persistent net liabilities that doubled from £-16k to £-34k over the last year. Stock (work in progress) represents the major current asset (£134,766), but the absence of fixed assets and minimal cash (£1,170) limit tangible asset backing. The shareholders’ funds are negative, reflecting accumulated losses and an equity deficit. The small share capital (£3) also indicates limited capital base. Overall, the financial position is fragile and dependent on external capital injections to sustain operations.

3. Cash Flow Assessment:
   Cash balances have sharply declined from £11,644 to £1,170 in the past year, while current liabilities increased by approximately £18,600, resulting in a worsening working capital deficit (-£34,361). Debtors and prepayments are negligible, indicating little short-term cash inflow from trade. The directors’ report confirms reliance on director and funder financial support to meet working capital needs, suggesting the company does not generate sufficient operational cash flow. Liquidity risk is evident given the low cash buffer against short-term liabilities.

4. Monitoring Points:

• Improvement in working capital position and elimination of net liabilities.
• Growth in cash balances or stable positive cash flow from operations.
• Reduction in reliance on director funding and evidence of sustainable profitability.
• Timely filing of accounts and confirmation statements to ensure regulatory compliance.
• Any changes in stock valuation or impairment, given the large stock holding.
• Financial impact of property market conditions on inventory turnover and margins.