What was the change in Chesters' accounts receivable in 2024?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
LOWS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| CASH FLOWS FROM OPERATING ACTIVITIES | _ | _ | |
|---|---|---|---|
| Net income | $ (69,699) | $ | 2,582,783 |
| Adjustments to reconcile net income to net cash | |||
| provided by operating activities: | |||
| Loss on disposal of fixed assets | 9,969 | - | |
| Amortization and depreciation | 522,927 | 462,783 | |
| Amortization of operating lease right-of-use assets | 189,709 | 387,265 | |
| Changes in operating assets and liabilities: | (4 = 00 000) |
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, the company's accounts receivable increased by $3,642,762 in 2024. This figure is derived from the statements of cash flows for the years ending December 31, 2024, and 2023. The document details changes in operating assets and liabilities, with the accounts receivable line item showing this substantial increase.
This increase in accounts receivable could signify a few things for Chesters. It might indicate a rise in sales on credit, where Chesters is extending more credit to its customers or franchisees. Alternatively, it could suggest challenges in collecting payments, leading to a higher outstanding balance. Understanding the reasons behind this increase would be crucial for assessing the financial health and operational efficiency of Chesters.
For a prospective franchisee, this information is relevant because it provides insight into Chesters' financial management practices. A significant increase in accounts receivable, if not managed effectively, could impact the company's cash flow and, consequently, its ability to support franchisees. Therefore, potential franchisees should inquire about Chesters' credit policies, collection procedures, and the overall quality of its accounts receivable to gauge the financial stability of the franchise system.