PEARCE AIR SYSTEMS LIMITED

Executive Summary

PEARCE AIR SYSTEMS LIMITED is financially stable and showing signs of growth, with increased asset investment and positive equity accumulation. While the company maintains a healthy working capital position, declining cash reserves and new long-term liabilities suggest attention is needed on cash flow management and debt control to sustain financial wellness.

PEARCE AIR SYSTEMS LIMITED - Analysis Report

Company Number: 13286918

Analysis Date: 2025-07-29 13:56 UTC

Financial Health Assessment Report
Company: PEARCE AIR SYSTEMS LIMITED
Reporting Date: 31 March 2024

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1. Financial Health Score: B

Explanation:
PEARCE AIR SYSTEMS LIMITED demonstrates a reasonably healthy financial condition for a relatively young enterprise (incorporated 2021). The business shows positive net assets and growing fixed assets, indicating ongoing investment in operational capacity. There is a healthy level of net current assets (working capital), and the company remains compliant with filing deadlines. However, the presence of non-current liabilities emerging in the latest year and a noticeable decline in cash reserves require attention. Overall, the company is financially stable but should monitor liquidity and debt carefully to maintain health.

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2. Key Vital Signs (Financial Metrics and Interpretation)

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	102,017	53,286	Significant increase (+91%) shows investment in plant and equipment—positive for capacity growth.
Net Assets (Equity)	123,462	117,938	Positive and growing equity base reflects retained earnings and financial stability.
Current Assets	487,311	343,929	Substantial increase (+42%), mainly due to higher debtors, indicating more sales on credit.
Cash and Cash Equivalents	67,982	101,362	Decline (-33%) is a symptom of tighter liquidity; may signal cash flow strain if trend continues.
Current Liabilities	421,612	279,277	Increase (+51%) primarily due to higher creditors, possibly linked to increased operations.
Net Current Assets (Working Capital)	65,699	64,652	Positive and stable; indicates ability to cover short-term liabilities with short-term assets.
Non-Current Liabilities	44,254	0	New long-term obligations appearing, indicating possible financing or leasing commitments.
Share Capital	10	10	Nominal and unchanged, typical for a small private company.
Retained Earnings	123,452	117,928	Accumulated profits support equity growth.

Additional Notes:

• The company recognizes revenue upon delivery or completion of services, following standard accounting principles.
• No audit required under small company exemption, accounts unaudited, so less assurance on accuracy but typical for company size.
• Directors are maintaining compliance with filings and statutory duties.

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3. Diagnosis: Financial Health Interpretation

PEARCE AIR SYSTEMS LIMITED exhibits the "vital signs" of a growing manufacturing business in the niche of non-domestic cooling and ventilation equipment. The sharp rise in fixed assets suggests capital investment to support expansion or enhance production capabilities, which is a healthy sign of business development.

The net assets have improved steadily, indicating profitability retained within the business, which enhances the company's financial "immune system." The working capital remains positive and stable, which means the company can comfortably meet its short-term obligations—a key symptom of financial wellness.

However, there are early "symptoms of distress" in liquidity as cash reserves have dropped by a third year-over-year. This is partly due to increased trade debtors and creditors. The increase in debtors shows more sales made on credit terms, which could strain cash flow if collections are delayed. The appearance of non-current liabilities (likely finance leases or loans) adds a new layer of long-term financial commitment, which needs careful management.

The company’s financial "heartbeat" is steady but requires close monitoring of cash flow management and creditor/debtor cycles to avoid liquidity issues.

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4. Recommendations: Actions to Improve Financial Wellness

• Enhance Cash Flow Monitoring:
  Implement rigorous credit control procedures to reduce debtor days and accelerate cash receipts. This will strengthen liquidity and reduce reliance on external financing.

• Manage Creditors Strategically:
  Negotiate supplier payment terms to optimize cash outflows without damaging supplier relationships. A balanced approach will ease short-term cash pressure.

• Review Long-Term Liabilities:
  Carefully assess the terms of any new finance leases or loans to ensure repayment schedules align with cash flow projections. Avoid over-leverage, which can stress the company’s financial health.

• Budget for Capital Investment Returns:
  Track the return on the increased fixed assets investment to confirm it contributes positively to profitability and operational efficiency.

• Maintain Compliance and Financial Reporting Discipline:
  Continue timely filing of accounts and confirmation statements. Consider periodic internal reviews of financial controls to prepare for potential future audits as the company grows.

• Consider Financial Planning and Forecasting:
  Develop rolling forecasts and scenario planning to anticipate financial needs and mitigate risks related to market or operational changes.

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