WORTHY EARTH EDUCATION LIMITED

Executive Summary

Worthy Earth Education Limited, a start-up in the education sector, demonstrates a weak financial structure with negative net assets and significant working capital deficits in its first year. The company currently relies heavily on director support and short-term borrowing, with limited cash resources to meet liabilities. Given these factors, credit facilities should be declined until the company establishes a stronger liquidity and profitability track record.

WORTHY EARTH EDUCATION LIMITED - Analysis Report

Company Number: 14722064

Analysis Date: 2025-07-29 13:23 UTC

1. Credit Opinion: DECLINE
   Worthy Earth Education Limited is a newly incorporated private limited company (March 2023) with its first set of accounts for the year ending March 2024 showing a weak financial position. The company has net current liabilities of £39,637 and overall negative net assets of £12,693. Significant bank borrowings (£54,565) form a large portion of current liabilities, which exceed current assets. The absence of any employees and low fixed assets suggests limited operational scale and capacity to generate immediate cash flows. Given the start-up nature, the company relies heavily on director support to continue as a going concern, but its current financials indicate a lack of internal liquidity and working capital to meet short-term obligations independently. Without stronger equity injection or proven revenue generation, the company’s ability to service debt is questionable at this stage.

2. Financial Strength:
   The balance sheet reveals a fragile financial structure. Fixed assets stand at £26,944, mainly plant and machinery, but current liabilities of £67,190 dwarf current assets of £27,553, resulting in negative working capital. The capital structure is weak with shareholders’ funds negative at £12,693 due to accumulated losses. The company’s financial position reflects a start-up phase with initial losses and high reliance on bank borrowing. The lack of equity buffer and negative net assets raise concerns about solvency if adverse trading conditions occur. The directors have confirmed intention to support the company, but this is not a substitute for sustainable financial strength.

3. Cash Flow Assessment:
   Cash at bank is £11,597, which is insufficient to cover near-term liabilities of £67,190. The current liabilities include significant bank borrowings (£54,565) which likely represent overdrafts or short-term loans. Debtors of £15,956 suggest some receivables due but overall liquidity is tight. Negative net current assets highlight a working capital deficiency, implying the company may face cash flow strain in meeting operating expenses and creditor payments without additional funding. The company’s cash flow position requires careful monitoring as it currently reflects a cash burn phase typical for early-stage businesses.

4. Monitoring Points:

• Cash flow and liquidity position: monitor monthly cash balances and ability to meet short-term obligations.
• Bank borrowings and repayment terms: assess covenant compliance and refinancing risk.
• Revenue growth and profitability trends: track progress towards generating positive operating cash flows.
• Directors’ financial support: confirm continued backing or equity injections if needed.
• Debtor collection efficiency: ensure timely conversion of receivables into cash.
• Filing of next accounts and confirmation statements to confirm ongoing compliance and updated financial position.