What was the net cash provided by operating activities for Chesters in 2022?
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) |
| Unearned franchise fees | (88,400) | (30,600) |
| Net cash provided by operating activities: | 3,097,928 | 2,046,059 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Purchases of equipment | (360,666) | (82,235) |
| Purchases of intangibles | (68,566) | (181,396) |
| Net cash used in investing activities | (429,232) | (263,631) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Repayment of long-term debt | (725,090) | (569,456) |
| Proceeds from long-term debt | - | 161,250 |
| Distribution to members | (1,820,272) | (831,314) |
| Net cash used in financing activities | (2,545,362) | (1,239,520) |
| INCREASE IN CASH | 123,334 | 542,908 |
| CASH AT BEGINNING OF YEAR | 2,392,340 | 1,849,432 |
| CASH AT END OF YEAR | $ 2,515,674 | $ 2,392,340 |
| SUPPLEMENTARY DISCLOSURE OF CASH | ||
| FLOWS INFORMATION: | ||
| Cash paid during the year for interest | $ 139,101 | $ 162,422 |
| Decrease to operating lease right-of-use assets | ||
| due to contract terminations | $ 846,599 | $ - |
| Additions to operating lease right-of-use assets | ||
| obtained from operating lease liabilities | $ 1,930,004 | $ 1,695,152 |
| Reduction of operating lease right-of-use assets |
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the net cash provided by operating activities in 2022 was $2,046,059. This figure reflects the cash generated from Chesters's core business operations during that year. It's a key indicator of the company's financial health and its ability to fund ongoing expenses and investments.
To arrive at this number, Chesters started with its net income of $2,693,133 and then made several adjustments. These adjustments included adding back non-cash expenses like depreciation and amortization ($503,875 and $390,480 respectively) and accounting for changes in various assets and liabilities. For instance, a loss on the disposal of fixed assets of $12,167 was added back, while changes in accounts receivable ($-86,568), due from related parties ($-592,834), inventories ($-155,319), prepaid expenses ($-8,823), accounts payable ($-161,039), accrued liabilities ($182,979), customer deposits ($-310,912), operating lease liabilities ($-390,480), and unearned franchise fees ($-30,600) were factored in.
For a prospective franchisee, this information is valuable because it provides insight into Chesters's ability to generate cash from its operations. A consistently positive net cash flow from operating activities suggests that the company is financially stable and can support its franchisees. However, it's important to consider these figures in conjunction with other financial metrics and industry benchmarks to get a comprehensive understanding of Chesters's financial performance. Franchisees should also investigate the reasons behind any significant changes in these figures from year to year, as they could indicate potential challenges or opportunities.