What was the net cash used in financing activities for Chesters 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) |
| 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 used in financing activities in 2023 was $2,545,362. This figure reflects the total cash outflow resulting from Chesters's financing activities during that year.
Specifically, this amount includes $725,090 in repayment of long-term debt and $1,820,272 in distributions to members. Repayment of long-term debt indicates Chesters paid down its outstanding loans, while distributions to members represent payments made to the owners or shareholders of the company.
For a prospective franchisee, understanding these cash flow dynamics is crucial. It provides insight into how Chesters manages its debt and allocates profits. A significant net cash outflow in financing activities could suggest that Chesters is prioritizing debt reduction or returning capital to its owners, which may have implications for future investments or financial stability. Therefore, potential franchisees should consider these factors when evaluating the overall financial health and sustainability of the Chesters franchise system.