What was the current portion of Cinch I.T.'s deferred revenue in 2022?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
| CINCH FRANCHISE LLX BALANCE SHEETS | ||||
|---|---|---|---|---|
| DECEMBER 31, 2023 AND 2 | 022 | |||
| ASSETS | ||||
| CHIRDCHET ADDITIO | 2023 | 2022 | ||
| CURRENT ASSETS Cash | S | 220,489 | S | 189,038 |
| Receivables - trade | 3 | 65,722 | 3 | 54,720 |
| Prepaid expenses | 03,142 | 14,494 | ||
| TOTAL CURRENT ASSETS | s | 286,211 | 8 | 258,252 |
| LIABILITIES AND MEMBER'S (DEFI | CTT/EQU | ITY | ||
| CURRENT LIABILITIES | ||||
| Payables - trade | S | 20,690 | 5 | 5,155 |
| Accrued liabilities | 22,314 | 16,534 | ||
| Current portion of deferred revenue | 42,375 | 55,500 | ||
| TOTAL CURRENT LIABILITIES | = | 85,379 | 77.189 | |
| LONG-TERM LIABILITIES | ||||
| Long-term debt | 98.500 | 98,500 | ||
| Long-term portion of deferred revenue | 19,625 | 39,500 |
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, the current portion of deferred revenue for Cinch I.T. in 2022 was $55,500. This figure represents the amount of revenue that Cinch I.T. has received but not yet earned as of the end of 2022, and which the company expects to recognize as revenue within the next year.
For a prospective Cinch I.T. franchisee, understanding deferred revenue is crucial because it reflects the company's financial stability and its ability to generate future revenue. A higher deferred revenue balance could indicate strong future earnings potential, as it represents services or products that customers have already paid for but have yet to receive. Conversely, a declining deferred revenue balance might raise concerns about future revenue streams.
It's important to note that deferred revenue is a liability on the balance sheet because Cinch I.T. has an obligation to provide the services or products for which it has already been paid. As Cinch I.T. fulfills these obligations, the deferred revenue is recognized as earned revenue on the income statement. Franchisees should monitor these figures over time to assess the financial health and sustainability of the Cinch I.T. franchise system.
In addition to the current portion of deferred revenue, the FDD also lists the long-term portion of deferred revenue, which represents revenue expected to be recognized beyond the next year. In 2022, this long-term portion was $39,500. Analyzing both the current and long-term deferred revenue can provide a more comprehensive view of Cinch I.T.'s financial obligations and future revenue prospects.