What was the net increase (decrease) in cash for Chem Dry in the second year presented?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
| Consolidated net (loss) income | $(44,277) $ | (6,330) $ | 2,941 | |
|---|---|---|---|---|
| Adjustments to reconcile consolidated net (loss) income to net | ||||
| cash from operating activities: | ||||
| Depreciation | 591 | 490 | 443 | |
| Amortization of intangible assets | 4,380 | 5,169 | 5,446 | |
| Bad debt expense | 627 | 6,949 | 2,990 | |
| Loss on disposal of property and equipment | - | - | 27 | |
| Impairment of goodwill | 45,537 | 1,266 | - | |
| Impairment of intangible assets | - | 4,952 | - | |
| Deferred income taxes | 265 | (2,595) | 795 | |
| Noncash lease expense | (121) | (44) | 100 | |
| Changes in operating assets and liabilities that provided | ||||
| (used) cash: | ||||
| Accounts receivable | 1 | (3,560) | (1,288) | |
| Inventory | (1,289) | (1,523) | (218) | |
| Notes receivable | 1,506 | 3,607 | 2,550 | |
| Prepaid expenses and other assets | (166) | 473 | (167) | |
| Deferred commissions | 284 | (92) | (461) | |
| Related party | (845) | (7,126) | (9,756) | |
| Accounts payable | (652) | (191) | (212) | |
| Accrued and other liabilities | 518 | (534) | 595 | |
| Deferred revenue | (2,407) | (2,282) | (1,250) | |
| Net cash provided by (used in) operating | ||||
| activities | 3,952 | (1,371) | 2,535 | |
| Cash Flows from Investing Activities | ||||
| Purchase of property and equipment | (1,109) | (581) | (585) | |
| Payments made for patents and trade names | (78) | (170) | (151) | |
| Proceeds from sale of property and equipment | - | - | 24 | |
| Net cash used in investing activities | (1,187) | (751) | (712) | |
| Net Increase (Decrease) in Cash | 2,765 | (2,122) | 1,823 | |
| Cash - Beginning of year | 1,717 | 3,839 | 2,016 | |
| Cash - End of year | $4,482 $ | 1,717 $ | 3,839 | |
| Classification of Cash | ||||
| Cash | $3,701 $ | 1,372 $ | 3,467 | |
| Restricted cash | 781 | 345 | 372 | |
| $4,482 $ | 1,717 $ | 3,839 | ||
| Total cash | ||||
| Supplemental Cash Flow Information - Cash paid for taxes | $185 $ | 161 $ | 69 | |
| Significant Noncash Transactions | ||||
| Leases entered into | $2,731 $ | - $ | - | |
| Transfer of property and equipment to related parties | - | - | (147) |
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the net decrease in cash for the second year presented was $2,122. This figure represents the overall change in Chem Dry's cash position during that year, taking into account all cash inflows and outflows from operating, investing, and financing activities.
For a prospective franchisee, this information is crucial as it provides insight into Chem Dry's financial stability and cash flow management. A decrease in cash could indicate challenges in generating revenue, managing expenses, or making necessary investments. It's important to note that a single year's decrease doesn't necessarily indicate a long-term problem, but it warrants further investigation.
A potential franchisee should analyze Chem Dry's cash flow statements over multiple years to identify trends and understand the reasons behind any fluctuations. They should also compare Chem Dry's financial performance to that of other franchises in the same industry to assess its relative strength and stability. Furthermore, it would be prudent to discuss these figures with the franchisor to gain a better understanding of the factors influencing Chem Dry's cash flow and the strategies in place to improve it.