How much did Chesters' accounts receivable change 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 deposits | 75,943 | (310,912) |
| Operating lease liabilities | (364,784) | (390,480) |
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the change in accounts receivable in 2023 was a decrease of $1,563,980. This figure is derived from the statements of cash flows for the years ended December 31, 2023, and 2022. The document notes this change as part of the adjustments to reconcile net income to net cash provided by operating activities.
This decrease in accounts receivable suggests that Chesters collected more cash from its customers than it recorded in revenue during 2023 compared to 2022. For a prospective franchisee, this could indicate more efficient revenue collection processes or changes in payment terms offered to customers. It's important to note that this change is part of a broader set of adjustments that ultimately determine the net cash provided by operating activities, which was $3,097,928 in 2023.
Understanding the reasons behind significant changes in accounts receivable can be crucial for assessing the financial health of Chesters. While a decrease might seem positive, it's essential to investigate whether it's a sustainable trend or a result of specific one-time events. A potential franchisee should consider this information in the context of overall financial performance and discuss any concerns with the franchisor to gain a comprehensive understanding.