What was the amount of Chesters' depreciation and amortization expenses in 2023?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
,834 |
CHESTER'S INTERNATIONAL, LLC STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
| 2023 | 2022 | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net income | $ 2,582,783 | $ 2,693,133 |
| Adjustments to reconcile net income to net cash | ||
| provided by operating activities: | ||
| Loss on disposal of fixed assets | - | 12,167 |
| Amortization and depreciation | 462,783 | 503,875 |
| Amortization of operating lease right-of-use assets | 387,265 | 390,480 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (1,563,980) | (86,568) |
| Due from related parties | (433,495) | (592,834) |
| Inventories | (116,596) | (155,319) |
| Prepaid expenses | 51,385 | (8,823) |
| Accounts payable | 2,184,712 | (161,039) |
| Accrued liabilities | (79,688) | 182,979 |
| Customer dep |
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the combined amortization and depreciation expense for the year 2023 was $462,783. This figure is part of the adjustments made to reconcile net income to net cash provided by operating activities. Depreciation and amortization are non-cash expenses, meaning they don't involve an actual outflow of cash, but they do reduce the company's reported net income.
For a prospective Chesters franchisee, understanding these figures is crucial for assessing the financial health and profitability of the franchisor. Amortization refers to the systematic expensing of the cost of intangible assets like patents or trademarks over their useful life, while depreciation refers to the same concept for tangible assets like equipment. These expenses reflect the wear and tear or obsolescence of assets used in the business.
The FDD also lists separate depreciation expenses. The depreciation expense for the year ended December 31, 2023, was $49,343. Additionally, the amortization expense for the year ended December 31, 2023, was $90,709. It is important to note that these figures may represent different aspects of the business's operations and should be considered in the context of Chesters' overall financial performance.
Reviewing these expenses over multiple years, as presented in the statements of cash flows, can provide insights into Chesters's capital investment strategy and asset management practices. A significant increase in depreciation or amortization expenses could indicate substantial investments in new assets or the recognition of impairment losses on existing assets, both of which could impact the franchisee's future costs and profitability.