What is the significance of the 'Advances' line item in All Team's cash flow statement?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
$ | 667,144 | $ | 787,144 |
ALL TEAM FRANCHISE CORPORATION STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| 2024 | 2023 | ||
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net income | $ (43,528) | $ 201,944 | |
| Adjustments to reconcile net income to net cash | |||
| provided by operating activities: | |||
| Allowance for credit losses | 6,000 | 5,501 | |
| Changes in account balances: | |||
| Accounts receivable - trade | 479,748 | 1,387,458 | |
| Prepaid expenses | (61,295) | (16,270) | |
| Advances | (434,801) | (605,008) | |
| Due from IRS | 49,780 | (49,780) | |
| Accounts payable-trade | (882) | 3,528 | |
| Accrued expenses | (107,077) | (45,671) | |
| Other funding liabiliti |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 33)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the 'Advances' line item on the cash flow statement reflects changes in the amounts All Team has advanced to companies owned primarily by its stockholder. These advances are essentially loans from All Team to these related companies. The cash flow statement details how these advances impact All Team's overall cash position during the reported periods.
Specifically, the cash flow statements for the years ended December 31, 2024 and 2023 show the impact of these advances on All Team's cash flow from operating activities. In 2024, the 'Advances' line item shows a value of ($434,801), and in 2023, it shows ($605,008). These negative values indicate that All Team advanced more money to related parties than it received back in repayments during those years. This outflow of cash reduces the total cash provided by operating activities for those years.
For a prospective All Team franchisee, this related-party lending activity is an important consideration. While it is not inherently problematic, it does raise questions about the financial management and priorities of All Team. A franchisee might want to inquire about the nature of these related companies, the terms of the advances (including interest rates and repayment schedules), and the potential impact on All Team's financial stability and resource allocation. Understanding the details of these transactions can help a franchisee assess the financial risks and opportunities associated with investing in an All Team franchise.