What was the net value of accounts receivable for Carbones Pizzeria, after accounting for the allowance for doubtful accounts?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
dentified during the audit.
Arcadia, California
May 31, 2024
M&T PIZZA INCORPORATED AND SUBSIDIARIES Consolidated Balance Sheet October 31, 2023
Assets
| Cash and cash equivalents | $ 161,252 |
|---|---|
| Accounts receivable, net of allowance for doubtful accounts of $109,133 | 287,928 |
| Due from stockholder | 492,605 |
| Accounts receivable, related party | 107,489 |
| Inventory | 3,650 |
| Prepaid expenses | 19,005 |
| Total current assets | 1,071,929 |
| Note receivable | 60,500 |
| Deferred tax assets | 13,000 |
| Property and equipment, net | 164,212 |
| Total assets | $ 1,309, |
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the net accounts receivable as of October 31, 2023, was $287,928, after deducting an allowance for doubtful accounts of $109,133. This figure represents the amount Carbones Pizzeria expected to collect from its outstanding accounts receivable after accounting for potential credit losses. This indicates the value of what is owed to Carbones Pizzeria.
For a prospective franchisee, understanding the accounts receivable and the allowance for doubtful accounts is crucial. Accounts receivable typically arise from royalties and advertising fees owed by franchisees. The allowance for doubtful accounts reflects Carbones Pizzeria's assessment of the risk that some franchisees may not pay these fees. A higher allowance suggests a greater perceived risk of non-payment, which could reflect financial difficulties among franchisees or other issues affecting their ability to meet their obligations.
The net accounts receivable figure provides insight into the financial health and stability of Carbones Pizzeria's revenue streams. Franchisees should consider this information in conjunction with other financial data to assess the overall risk and potential return of investing in a Carbones Pizzeria franchise. Reviewing trends in accounts receivable and the allowance for doubtful accounts over time can also provide a more comprehensive understanding of the financial dynamics within the franchise system.
It's important for potential franchisees to inquire about the specific factors that contribute to the allowance for doubtful accounts and the measures Carbones Pizzeria takes to manage and mitigate credit risks associated with franchisee payments. Understanding these aspects can help franchisees better evaluate the financial stability of the franchise and the potential impact on their own operations.