THE SPLIT BEAN LIMITED

Executive Summary

THE SPLIT BEAN LIMITED is currently in a weak financial position with negative net assets and significant liquidity challenges. The company’s deteriorating balance sheet and negative working capital raise concerns about its ability to meet short-term obligations. Based on the latest financial data, credit facilities should be declined until there is clear evidence of financial recovery and improved cash flow management.

THE SPLIT BEAN LIMITED - Analysis Report

Company Number: 13246507

Analysis Date: 2025-07-29 14:56 UTC

1. Credit Opinion: DECLINE
   THE SPLIT BEAN LIMITED exhibits significant financial distress as evidenced by its deteriorating net assets position, from a modest positive £285 in the prior year to a negative £13,393 in the latest financial year. The substantial increase in current liabilities to £19,997 against current assets of only £5,611 results in a negative working capital of £14,236, indicating liquidity strain and potential difficulty in meeting short-term obligations. The company is a micro-entity operating in the high-risk food service sector (unlicensed restaurants and cafes), with a small workforce and limited fixed assets. The rapid decline in financial health within a single year suggests operational or cash flow challenges. There is no indication of external financing or substantial shareholder equity to buffer these losses. Given these factors, the company currently lacks sufficient financial strength and liquidity to support additional credit or loan facilities without substantial mitigating factors.

2. Financial Strength:
   The balance sheet reveals weakening financial strength. Fixed assets are minimal (£843), implying limited collateral value. The drastic increase in current liabilities from £7,754 to nearly £20,000, without a corresponding rise in current assets, has turned net current assets deeply negative. Negative net assets indicate the company is technically insolvent on a balance sheet basis. Shareholder funds have eroded from positive to negative territory, reflecting accumulated losses or unprovided liabilities. The company’s equity base is effectively wiped out, increasing credit risk substantially.

3. Cash Flow Assessment:
   The negative working capital position signals cash flow constraints, with current liabilities far exceeding liquid assets. The reduction in average employees from 4 to 2 may reflect cost-cutting measures but also suggests downsizing due to financial pressure. Without detailed cash flow statements, the high current liabilities and shrinking asset base suggest the company may be struggling to generate sufficient operating cash flow to meet immediate debts. The absence of significant fixed assets also limits options for asset-based lending or liquidation to improve cash availability.

4. Monitoring Points:

• Monitor quarterly management accounts closely for cash flow trends and debtor/creditor days.
• Track any reduction in current liabilities or improvement in working capital position.
• Observe any changes in director appointments or shareholder injections that may improve capital structure.
• Watch for timely filing of future accounts and confirmation statements to assess ongoing compliance.
• Review any strategic changes or restructuring efforts aimed at returning to profitability.