What was the change in deferred revenue for Chocolate Bash in 2021?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
D DECEMBER 31, 2023 & DECEMBER 31, 2022 & DECEMBER 31, 2021
| 2023 | 2022 | 2021 | |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Net Income | $ 15,483 | $ 28,687 | $ 38,808 |
| Non-Cash Adjustments | |||
| Changes in Deferred Revenue | 24,896 | (23,021) | 22,000 |
| Changes in Due From Affiliate | (35,956) | - | 1,250 |
| Changes in Accounts Receivable | 19,041 | (21,194) | - |
| NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES | 23,464 | (15,528) | 62,058 |
| INVESTING ACTIVITIES | |||
| NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES | - | - | - |
| FINANCING ACTIVITIES | |||
| Owner's Contribution (net) | (61,122) | (30,100) | 17,940 |
| NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES | (61,122) | (30,100) | 17,940 |
| NET INCREASE (DECREASE) IN CASH | (37,658) | (45,628) | 79,998 |
| CASH AT BEGINNING OF PERIOD | 59,295 | 104,922 | 24,924 |
| CASH AT |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the change in deferred revenue for the company in 2021 was $22,000. This figure is part of the Statement of Cash Flows, which provides a summary of the movement of cash both into and out of the company during that year. Deferred revenue represents payments Chocolate Bash has received for goods or services that have not yet been provided or earned.
An increase in deferred revenue typically indicates that Chocolate Bash has collected more cash upfront for future services, such as franchise fees or royalties, which will be recognized as revenue later. For a prospective franchisee, a positive change in deferred revenue could signal growing sales and financial stability for the franchisor.
However, it's important to note that deferred revenue is a liability on the balance sheet, as Chocolate Bash has an obligation to provide those future services. A significant increase in deferred revenue without a corresponding increase in the fulfillment of those obligations could potentially create a future financial burden for the company. Therefore, prospective franchisees should monitor the trend of deferred revenue and its relationship to actual revenue recognition over time to assess the long-term financial health of Chocolate Bash.