What was the total increase (decrease) in cash for 7 Brew as of December 31, 2023?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
ber 29, 2024 | $ 17,776,440 |
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| December 29, 2024 | December 31, 2023 | December 25, 2022 | |
|---|---|---|---|
| Operating Activities | $ 18,388,782 | $ 1,560,891 | $ (2,563,076) |
| Net income (loss) | |||
| Adjustments to reconcile net income (loss) to net cash | |||
| provided by operating activities Depreciation and amortization Operating lease asset/liability Loss on disposal of software in development Gift card breakage | 55,238 12,550 693,200 (1,485,646) | 19,643 35,666 - - | 9,407 - - - |
| Changes in Accounts receivable Prepaid expenses and other current assets Accounts payable and accrued expenses Deferred franchise fees | (848,299) (1,600,294) 5,954,321 4,428,639 | (135,935) (176,538) 2,074,593 8,509,758 | (537,588) (43,392) 1,878,039 9,312,180 |
| Net cash provided by operating activities | 25,598,491 | 11,888,078 | 8,055,570 |
| Investing Activities Purchase of property and equipment Advances to Parent Net cash used in investing activities | (941,616) (3,949,623) (4,891,239) | (421,290) (12,999,978) (13,421,268) | (60,581) (13,593,164) (13,653,745) |
| Increase (Decrease) in Cash | 20,707,252 | (1,533,190) | (5,598,175) |
| Cash, Beginning of Period | 2,111,088 | 3,644,278 | 9,242,453 |
| Cash, End of Period | $ 22,818,340 | $ 2,111,088 | $ 3,644,278 |
| Supplemental Non-Cash Activities Right-of-use asset obtained in exchange for new operating lease liability Accounts payable and accrued expenses relating to purchases of f |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 82)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the total increase (decrease) in cash as of December 31, 2023, was a decrease of $1,533,190. This indicates that 7 Brew had a net cash outflow during that year. This figure is derived from the company's statement of cash flows, which tracks all cash inflows and outflows from operating, investing, and financing activities. Understanding the reasons behind this decrease would be important for a prospective franchisee.
Specifically, the statement of cash flows categorizes cash flow activities into operating, investing, and financing activities. Operating activities reflect the cash generated or used from the company's core business operations. Investing activities include the purchase and sale of long-term assets, such as property, plant, and equipment. Financing activities involve transactions related to debt, equity, and dividends. The net increase or decrease in cash is the sum of the cash flows from these three activities.
For a potential 7 Brew franchisee, this information is crucial for assessing the financial health and stability of the company. A decrease in cash could be due to various factors, such as increased investments in property and equipment, significant operating losses, or large debt repayments. While a single year's decrease may not be alarming, consistent negative cash flow could indicate potential financial challenges. It would be prudent for a prospective franchisee to investigate the reasons behind the cash decrease and assess whether it is a temporary situation or a sign of underlying financial issues. Further due diligence, including reviewing several years of financial statements and discussing the company's financial performance with existing franchisees, is advisable.