AC AND VENT SOLUTIONS LIMITED

Executive Summary

AC AND VENT SOLUTIONS LIMITED demonstrates solid financial health with significant improvements in liquidity and equity over a short period. However, rising trade creditors and debtors suggest the need for careful working capital management to sustain growth. With attentive cash flow controls and transparent profitability tracking, the company is well-positioned for continued financial wellness.

AC AND VENT SOLUTIONS LIMITED - Analysis Report

Company Number: 14383983

Analysis Date: 2025-07-20 14:37 UTC

Financial Health Assessment for AC AND VENT SOLUTIONS LIMITED

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1. Financial Health Score: B

The company exhibits a solid financial footing with strong growth in net current assets and shareholders' funds within a short operating period (since 2022). However, some caution is warranted due to relatively high current liabilities and the absence of a full profit and loss disclosure. Overall, the financial "vital signs" suggest a generally healthy business with positive momentum but room for improvement in liquidity management.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	3,105,328	1,078,958	Significant increase, indicating improved short-term asset base (cash, debtors, stock)
Cash at Bank	1,402,481	118,811	Healthy cash flow presence, substantial increase in liquid resources
Debtors	946,323	432,877	Higher receivables; could indicate increased sales or credit risk
Current Liabilities	2,094,733	753,601	More than doubled, possibly from trade creditors; needs monitoring for liquidity pressure
Net Current Assets	1,010,595	325,357	Positive working capital improved, reflecting operational liquidity improvement
Shareholders’ Funds	1,013,474	326,265	Increased equity base, showing retained profitability or capital injection
Tangible Fixed Assets	2,879	948	Modest fixed asset base, typical for service industry
Number of Employees	12	8	Moderate workforce growth, supporting business expansion

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3. Diagnosis

Symptoms Analysis:

• Cash Flow Vitality: The large jump in cash reserves from £118k to £1.4M is a very strong sign of healthy cash flow management or capital inflow. This is akin to a patient showing a robust pulse, indicating good financial circulation.

• Working Capital Strength: Net current assets have tripled, signaling the company’s improved ability to cover short-term obligations. This resembles a patient with strong muscle tone—ready to meet immediate challenges.

• Trade Creditors Growth: Current liabilities have nearly tripled, mainly driven by trade creditors rising from £303k to £1.8M. This could indicate the company is leveraging supplier credit extensively, which if unmanaged, may cause liquidity strain — a symptom of financial stress that requires monitoring.

• Receivables Increase: Debtors have more than doubled, suggesting growth in sales but also a potential delay in cash collection, which can strain liquidity if not controlled. This is like a backlog in patient recovery that may delay full health restoration.

• Equity Build-up: Shareholders’ funds have grown substantially, which may reflect retained earnings or capital injections, strengthening the company’s financial 'immune system'.

• Lack of P&L Disclosure: The absence of a detailed profit and loss account restricts insight into profitability trends, an important aspect of diagnosing sustainable health.

• Industry Context: Operating in steam and air conditioning supply (SIC 35300), a capital and labour-intensive sector, the company’s asset and employee growth aligns with expected business development.

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4. Recommendations

• Monitor and Manage Trade Creditors: The rapid rise in trade creditors should be carefully managed to avoid liquidity crunch. Negotiate longer payment terms or stagger payments to maintain a healthy cash flow cycle.

• Improve Debtor Collections: Implement stricter credit control policies and accelerate receivables turnover to avoid cash flow blockages. Regularly review aged debtor reports.

• Profit and Loss Transparency: Although exempt from audit, consider voluntarily disclosing P&L details to provide clearer insights for stakeholders and to better track profitability trends and margins.

• Cash Flow Forecasting: Maintain detailed rolling cash flow forecasts to anticipate and mitigate potential short-term liquidity pressures.

• Capacity Planning: With employee growth and increased stock levels, ensure operational efficiency to convert increased resources into sustainable revenue and profit.

• Risk Assessment: Keep an eye on taxation liabilities (corporation tax nearly doubled) and ensure timely payments to avoid penalties.

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Summary

AC AND VENT SOLUTIONS LIMITED shows strong financial growth within its initial years, with healthy cash reserves and expanding equity, indicating a robust financial pulse. However, the rapid increase in trade creditors and debtors signals the need for vigilant working capital management to prevent liquidity stress. Overall, the company’s financial health is good, but proactive management of cash flow and credit risk is essential to maintain this positive trajectory.