What financial instruments are held by Bumper Man, according to the FDD?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
g principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Bad Debts
The Company uses the reserve for bad debt method of valuing doubtful accounts receivable which is based on historical experience, coupled with a review of the current status of existing receivables. The balance of the reserve for do
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to Bumper Man's 2025 Franchise Disclosure Document, the company maintains accounts receivable and a reserve for bad debts. The reserve for doubtful accounts receivable was valued at $159,129 as of December 31, 2024. This reflects the company's estimate of accounts that may not be fully collectible. The reserve was $129,645 on December 31, 2023, and $120,787 on December 31, 2022.
Accounts receivable represent money owed to Bumper Man by its customers for services rendered or products sold on credit. The bad debt reserve is a contra-asset account that reduces the gross amount of accounts receivable to the net realizable value, which is the amount the company expects to collect. The increase in the reserve for bad debts from 2022 to 2024 suggests that Bumper Man has been experiencing a higher level of uncollectible accounts receivable, which could be due to various factors such as economic conditions or changes in credit policies.
For a prospective franchisee, this information indicates that Bumper Man manages credit risk and accounts receivable. Understanding the company's approach to managing bad debts can be important for franchisees, as it may impact their own financial performance and cash flow. Franchisees may want to inquire about Bumper Man's credit policies, collection procedures, and the factors contributing to the bad debt reserve. This will allow them to better assess the financial health of the company and its ability to manage financial risks.