What was the total amount of Cinch I.T.'s trade receivables as of December 31, 2022?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
e substantial doubt about Cinch Franchise, LLC's ability to continue as a going concern for a reasonable period of time.
| CINCH FRANCE | HISE, LLC | |||
|---|---|---|---|---|
| BALANCE S | ||||
| DECEMBER 31, 20 | 22 AND 2021 | |||
| $15-50-50MS(7M-4-5 | 40.000 | |||
| ASSET | S |
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, the company's trade receivables as of December 31, 2022, totaled $54,720. This figure represents the amount of money owed to Cinch I.T. by its customers for services rendered but not yet paid. Trade receivables are considered a current asset on the company's balance sheet, indicating that they are expected to be converted into cash within one year.
For a prospective Cinch I.T. franchisee, understanding the franchisor's trade receivables can provide insights into the company's revenue collection efficiency and the creditworthiness of its customer base. A high level of trade receivables might suggest potential issues with collecting payments, while a lower level could indicate efficient revenue management. However, it is important to note that the company's policy is to not accrue interest on trade receivables. Additionally, Cinch I.T. has not established an allowance for uncollectible accounts because management has determined that the potential for bad debts is not material as of December 31, 2022 and 2021.
It's also worth noting that Cinch I.T. has related party transactions that impact receivables. For example, Cinch I.T., Inc., a related party, owes advertising and royalty fees that are included in trade receivables. In 2023, the franchisee owed the company $22,191 in advertising and royalty fees. Monitoring related party transactions is crucial for franchisees to ensure transparency and fair dealing.