PDA ENGINEERING LTD

Executive Summary

PDA ENGINEERING LTD faces a significant reduction in liquidity and net assets over the last year, indicating financial stress despite remaining solvent. Immediate focus on cash flow management, cost control, and revenue growth is necessary to stabilize and improve financial health. With targeted actions, the company can recover its financial vitality and avoid deeper distress.

PDA ENGINEERING LTD - Analysis Report

Company Number: 13586407

Analysis Date: 2025-07-29 15:53 UTC

Financial Health Assessment for PDA ENGINEERING LTD

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1. Financial Health Score: C

Explanation:
PDA ENGINEERING LTD shows signs of financial strain in its most recent year, reflected by a sharp decline in net current assets and net assets compared to prior years. However, the company remains solvent with positive net assets and working capital. The score "C" indicates caution — the company is not in critical distress but exhibits symptoms that require active management to restore financial vitality.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	154	307	Very low fixed assets, negligible change. Asset base is minimal, typical for micro entities.
Current Assets	17,927	50,471	Significant drop (~65%) in liquid resources and receivables, indicating shrinking cash inflow.
Current Liabilities	14,540	24,278	Current debts decreased, but not proportionally to assets. Short-term obligations remain sizable.
Net Current Assets (Working Capital)	3,387	26,193	Sharp reduction indicates weakening short-term liquidity, a “symptom of distress”.
Total Assets less Current Liabilities	3,541	26,500	Overall net asset base fell drastically, signaling diminished financial buffer.
Net Assets (Shareholder Equity)	3,507	26,352	Equity decline reflects accumulated losses or withdrawals; shareholder buffer is thin now.
Number of Employees	1	1	Stable staffing, but very small scale operation.

Interpretation of Vital Signs:

• The company had a healthy cash flow and strong working capital in earlier years but has experienced a marked decrease in current assets and net assets in the latest year, suggesting operational or market challenges.
• The working capital remains positive, indicating the company can meet short-term liabilities, but the margin is much narrower than before—a warning sign akin to a patient whose vital signs have deteriorated but remain stable enough to avoid immediate critical intervention.
• Fixed assets are minimal, implying the business is not capital intensive but may also lack physical resources for growth.

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3. Diagnosis

PDA ENGINEERING LTD’s financial "vitals" reveal a business under pressure. The pronounced reduction in current assets and net assets over the last year is a critical symptom indicating lower liquidity and potentially reduced profitability or cash inflows. While the company is not insolvent, this sharp decline suggests underlying operational challenges—possibly reduced sales, delayed receivables, or increased costs.

The director’s loan account shows a small amount owed back to the company, which is not material but worth monitoring. The company operates with only one employee, which keeps overhead low but limits capacity for expansion.

The company is classified as a micro-entity, so reporting requirements are minimal, but the financial data signals a need for strategic review to prevent further deterioration.

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4. Recommendations

1. Improve Cash Flow Management:
   Conduct a detailed review of receivables and payables to accelerate collection and delay payments where possible, to rebuild working capital. Consider tighter credit control and incentivizing early payments from customers.

2. Cost Control and Expense Review:
   Scrutinize operating expenses to reduce unnecessary costs while maintaining core business functions. Explore renegotiating supplier contracts or finding more cost-effective alternatives.

3. Business Development and Revenue Growth:
   Identify new market opportunities or projects to increase sales volume. Diversify client base to reduce dependency on few customers and stabilize revenue streams.

4. Financial Monitoring and Forecasting:
   Implement monthly financial "check-ups" to monitor liquidity, profitability, and cash flow trends proactively. Use forecasting tools to anticipate future funding needs and avoid surprises.

5. Director Involvement and Support:
   Given the small scale, the director should take an active role in daily financial oversight and consider whether external professional advice (e.g., accountant or financial advisor) could improve financial planning and crisis management.

6. Consider Capital Injection or External Financing:
   If cash flow issues persist, explore options for additional equity investment or short-term loans to strengthen the balance sheet and support operational needs.

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Medical Analogy Summary:

The company’s financial health resembles a patient whose vital signs have noticeably weakened but is not yet in critical condition. The "symptoms" such as reduced liquidity and equity signal distress that, if untreated, could lead to serious financial illness. Prompt intervention focusing on restoring cash flow and controlling costs is essential to return the company to robust health.

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