What was the net value of Chesters' accounts receivable, after allowance for doubtful accounts, in 2022?
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 | 1,117,539 | 684,044 |
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the net value of accounts receivable, after allowance for doubtful accounts, was $3,735,366 as of December 31, 2022. This figure represents the amount Chesters expected to collect from its customers after accounting for potential uncollectible accounts.
Accounts receivable are amounts owed to Chesters by its customers for goods or services already provided. The 'allowance for doubtful accounts' is an estimate of the portion of these receivables that Chesters believes it will not be able to collect. This allowance is a contra-asset account that reduces the gross accounts receivable to its net realizable value.
For a prospective franchisee, understanding the accounts receivable and the allowance for doubtful accounts can provide insights into Chesters's credit policies and the financial health of its customer base. A higher allowance for doubtful accounts might indicate a higher risk of non-payment by customers, which could impact Chesters's cash flow and profitability. Conversely, a lower allowance might suggest more stringent credit policies or a more financially stable customer base.