Company Number: 13790058

Analysis Date: 2025-07-20 16:39 UTC

Financial Health Assessment for AD COOLING LTD

---

1. Financial Health Score: B-

Explanation:
AD COOLING LTD demonstrates modest but improving financial health for a micro-entity in its early years. The company shows positive net current assets and net assets, indicating a stable liquidity position and positive equity. However, the absolute values are small, and growth is gradual, suggesting the company is in a fragile but steady state rather than robust financial health.

---

2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£16,114	Represents cash, receivables, and short-term assets; increased significantly from prior year.
Current Liabilities	£13,242	Obligations due within one year; increased but proportionate to current assets.
Net Current Assets	£2,872	Positive working capital indicates the company can cover short-term debts—a sign of healthy cash flow.
Net Assets (Shareholder Funds)	£2,872	Indicates positive equity; small but improving, reflecting retained earnings or capital injections.
Average Employees	1	Small workforce consistent with micro-entity classification; limited human resource risk.

Vital Sign Analysis:

• The increase in current assets versus liabilities from 2023 to 2024 suggests improving liquidity and working capital management.
• The stable and positive net assets show no signs of insolvency or financial distress.
• Small scale operations (micro-entity) mean the company is still in a growth or stabilization phase.

---

3. Diagnosis

Symptoms Analysis:

• The company’s financial "vital signs" reveal a "healthy cash flow" situation with sufficient short-term assets to cover immediate liabilities.
• The gradual increase in net assets (from £147 to £2,872 in a year) suggests positive retention or capital investment, important for future sustainability.
• The micro-entity status and single-employee operation reflect a lean operating model, which can be both a strength (low overhead) and a vulnerability (limited operational capacity).
• No overdue filings or compliance issues indicate sound administrative health.
• Directors and significant controllers have clear ownership and governance structure, reducing risks related to management conflicts.

Overall Diagnosis:
AD COOLING LTD is financially stable with improving liquidity and equity. It shows no overt "symptoms of distress" such as negative working capital, excessive liabilities, or audit qualifications. However, the company’s small scale and relatively low asset base indicate a delicate state where careful cash flow management and growth strategies are essential to avoid future financial strain.

---

4. Recommendations

1. Strengthen Liquidity Buffer:
   Although current assets cover liabilities, building a larger cash reserve will improve resilience against unexpected expenses or downturns.

2. Focus on Profitability and Retained Earnings:
   Increasing retained profits through enhanced revenue or cost control will boost net assets and provide internal funding for growth.

3. Monitor Working Capital:
   Continue close monitoring of receivables and payables to maintain positive net current assets, avoiding liquidity crunches.

4. Plan for Scaling:
   As the company grows, consider investing in operational capacity (staff, equipment) balanced against cash flow to sustain growth without overextending.

5. Regular Financial Review:
   Conduct periodic financial health checks to spot early warning signs, ensuring proactive management of financial risks.

---