What was the change in Cinnaholic's prepaid expenses between 2023 and 2024?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
| 71,199 | (331,695) | |||
|---|---|---|---|---|
| Members' (Deficit) - Beginning | (2,290,083) | (2,025,527) | ||
| Members' Contributions (Distributions) | 108,591 | 67,139 | ||
| Members' (Deficit) - Ending | $ (1,710,293) | $ (2,290,083) | # CINNAHOLIC FRANCHISING LLC STATEMENTS OF CASH FLOWS |
| YEARS ENDED | DECEMBER 31 | ||
|---|---|---|---|
| 2024 | 2023 | ||
| Operating Activities | |||
| Net (Loss) | $ 471,199 | $ (3 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 61)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the line item for prepaid expenses saw a significant shift between 2023 and 2024. In 2023, prepaid expenses were reported as negative $101,926. In 2024, this figure changed to $117,143. This indicates a substantial increase in prepaid expenses for Cinnaholic during this period.
This change in prepaid expenses could reflect a number of factors. It is possible Cinnaholic made more advance payments for services like insurance, rent, or advertising in 2024 compared to 2023. These prepayments are recorded as assets on the balance sheet until the benefits are realized, at which point they are recognized as expenses. The swing from a negative value in 2023 to a positive value in 2024 suggests a notable change in Cinnaholic's financial strategy or operational activities.
For a prospective Cinnaholic franchisee, this data highlights the importance of understanding the company's financial management practices. While prepaid expenses are a normal part of business operations, significant fluctuations could signal changes in the company's approach to managing its finances. It would be prudent for potential franchisees to inquire about the reasons behind this change and how Cinnaholic manages its prepaid expenses to ensure financial stability and transparency.
Understanding these figures is crucial for potential franchisees to assess the financial health and stability of Cinnaholic. Consulting with a financial advisor to interpret these figures in the context of the broader financial statements is advisable.