RS AIR CONDITIONING LTD

Executive Summary

RS AIR CONDITIONING LTD is currently experiencing significant financial challenges characterized by negative net assets and working capital deficits, reflecting liquidity and solvency risks. Immediate action to improve cash flow, inject capital, and control costs is essential to restore financial health and support sustainable growth. The company’s early stage suggests potential for recovery if these steps are undertaken promptly and effectively.

RS AIR CONDITIONING LTD - Analysis Report

Company Number: 14247185

Analysis Date: 2025-07-29 20:34 UTC

Financial Health Assessment: RS AIR CONDITIONING LTD (As at 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company shows clear symptoms of financial distress, including persistent negative net assets and working capital deficits. While still active, the financial "vital signs" indicate an unhealthy condition that requires urgent attention to avoid deeper issues such as insolvency risk.

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2. Key Vital Signs and Interpretation

Metric	Value (£)	Interpretation
Current Assets	639	Very low short-term assets, mainly cash and debtors; limited liquidity buffer.
Cash at Bank	301	Minimal available cash, indicating tight operational cash flow.
Current Liabilities	3,687	Substantial short-term obligations, significantly exceeding current assets.
Net Current Assets (Working Capital)	-3,048	Negative working capital signals inability to cover short-term debts with liquid assets.
Net Assets (Shareholders’ Funds)	-3,048	Negative equity indicates the company’s liabilities surpass total assets, a sign of financial strain.
Share Capital	2	Nominal equity investment; very low capital base.
Profit & Loss Reserves	-3,050	Accumulated losses absorbed all equity, reflecting ongoing operational losses or write-downs.
Employee Count	0	No employees reported, suggesting either very early stage or minimal operational scale.

Additional Context:

• The company was incorporated in July 2022, so it is relatively new, and the accounts cover a short period (Aug 2023 to Mar 2024).
• Directors have changed recently, which can sometimes indicate management restructuring.
• Industry: Plumbing, heat, and air-conditioning installation — a sector typically requiring upfront investment in materials and labor, making cash flow management critical.

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3. Diagnosis: What the Financial Data Reveals

RS AIR CONDITIONING LTD is currently in a precarious financial state, akin to a patient presenting with "symptoms" of severe liquidity strain and capital erosion. The negative working capital and net assets indicate the company owes more than it owns in the short and long term, which is a classic symptom of financial distress. The minimal cash balance further weakens the company’s ability to meet immediate obligations, suggesting potential difficulties in sustaining operations without external intervention.

The absence of employees might mean the company is not yet fully operational or relies on subcontractors, which could explain low expenses but also limited revenue generation capacity. The accumulated losses in the profit and loss reserve are a red flag, showing that the company’s operations have not yet generated positive returns.

Given the short trading history and the fact that this is a start-up phase company, these issues might represent typical early-stage "growing pains." However, the current financial state is not sustainable without corrective measures.

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4. Recommendations: Steps to Improve Financial Wellness

• Improve Cash Flow Management:
  Establish tighter control over receivables and payables. Consider negotiating extended payment terms with suppliers or early payment discounts with customers to improve liquidity.

• Capital Injection:
  Seek additional equity investment or director loans to shore up the balance sheet and increase working capital. This is essential to cover liabilities and fund ongoing business activities.

• Cost Control:
  Review all expenses rigorously. With zero employees, focus on managing subcontractor costs and overheads to avoid further losses.

• Revenue Growth Strategies:
  Accelerate contract acquisition and project completion to increase turnover. As turnover grows, economies of scale can improve profit margins and cash generation.

• Regular Financial Monitoring:
  Implement monthly cash flow forecasts and management accounts to detect early warning signs and adjust plans promptly.

• Consider Professional Advice:
  Engage with a financial advisor or turnaround specialist to develop a restructuring plan and explore options such as refinancing or phased growth.

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