Company Number: 12862756

Analysis Date: 2025-07-29 20:33 UTC

1. Credit Opinion: DECLINE
   WELL TEA LTD demonstrates persistent negative net current assets and net liabilities as of the latest financial year ending September 2023. The company’s balance sheet indicates a fragile financial position with current liabilities significantly exceeding current assets. The small scale of operations (micro-entity) and limited working capital raise concerns about the company’s ability to service additional credit facilities or repay debt in a timely manner. The lack of positive cash or liquid assets and negative equity position suggest financial stress and low resilience to economic shocks.

2. Financial Strength:
   The company’s net assets have deteriorated from positive £1,062 in 2020 to a negative £4,156 in 2023. Current liabilities increased from £7,114 in 2020 to £4,209 in 2023, while current assets dropped sharply to only £53 in 2023. Shareholders’ funds are negative, reflecting accumulated losses or capital erosion. This weak capital structure and negative net worth imply poor financial strength, limiting the company’s ability to absorb operational losses or obtain external financing on favourable terms.

3. Cash Flow Assessment:
   Working capital is negative and deteriorating, as current liabilities continue to exceed current assets by a wide margin. The micro-entity has minimal cash or equivalents available, indicating potential liquidity constraints. With only one employee and minimal current assets, the business likely has limited cash inflows and may be reliant on shareholder funds or short-term credit to meet obligations. This liquidity risk suggests difficulty in funding day-to-day operations or servicing debt without further capital injection.

4. Monitoring Points:

• Track changes in net current assets and liquidity ratios quarterly to detect any improvement or further deterioration.
• Monitor operating cash flow trends and creditor aging reports to assess payment discipline and cash conversion cycle.
• Review any capital injections or shareholder loans to support working capital needs.
• Watch for any director changes or indications of restructuring that may impact future financial stability.
• Keep an eye on overdue accounts or delayed filings as early warning signs of distress.