What was the net value of Chesters' accounts receivable in 2023?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
mingham, Alabama April 4, 2024
CHESTER'S INTERNATIONAL, LLC BALANCE SHEETS DECEMBER 31, 2023 AND 2022
| ASSETS | ||
|---|---|---|
| 2023 | 2022 | |
| CURRENT ASSETS | ||
| Cash | $ 2,515,674 | $ 2,392,340 |
| Accounts receivable, net of allowance for | ||
| doubtful accounts | 5,299,346 | 3,735,366 |
| Due from related parties | 1,117, |
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, the net accounts receivable for 2023 was $5,299,346. This figure represents the amount Chesters expected to collect from its customers after accounting for doubtful accounts. The corresponding value for 2022 was $3,735,366.
Accounts receivable are amounts owed to Chesters by its customers for goods or services already provided. The 'net' value means that Chesters has already subtracted an allowance for potential uncollectible accounts. This allowance is an estimate of the amount of receivables that Chesters does not expect to receive, reflecting a realistic view of their assets.
For a prospective franchisee, understanding the franchisor's accounts receivable can provide insight into the financial health and stability of Chesters. A significant increase in net accounts receivable from one year to the next could indicate growth in sales or a change in credit policies. However, it could also signal potential issues with collecting payments from customers. Therefore, it's essential to consider this figure in conjunction with other financial metrics and to inquire about Chesters' credit and collection practices during the due diligence process.
Chesters' accounting policies state that accounts receivable primarily consist of trade receivables from customers and are stated at the amount the Company expects to collect, net of allowance. The company extends credit based on an evaluation of the customer's financial condition. As of December 31, 2024 and 2023, the Company has recorded an allowance for credit losses of $7,726 and $46,653, respectively.