What was the net increase in cash for Cinnaholic for the year ended December 31, 2022?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- | (11,803) | | | Net (Loss) | (331,695) | (562,616) | | | Members' (Deficit) - Beginning | (2,025,527) | (1,138,911) | | | Members' Contributions (Distributions) | 67,139 | (324,000) | | | Members' (Deficit) - Ending | $ (2,290,083) | $ (2,025,527) | |# CINNAHOLIC FRANCHISING LLC STATEMENTS OF CASH FLOWS
| YEARS ENDED | DECEMBER 31 | ||
|---|---|---|---|
| 20232022 | |||
| Operating Activities | |||
| Net (Loss) | $ (331,695) | $ (562,616) | |
| Adjustments to reconcile net (loss) to net cash | |||
| provided by operating activities: | |||
| Changes in assets and liabilities | |||
| Due from franchisee | - | (1,500) | |
| Accounts Receivable | 94,821 | (206,259) | |
| Prepaid Expenses | (101,926) | (434,231) | |
| Investments (securities) | 88,212 | ||
| Deferred commissions | 3,657 | (171,322) | |
| Accounts payable and accrued expenses | (12,248) | 119,900 | |
| Related party payable | 61,000 | 100,000 | |
| Advertising fund liability | (10,218) | (70,035) | |
| Deferred franchise fees | 67,572 (140,825) | 995,542 (230,521) | |
| Financing Activities | |||
| SBA loan payments | (148,312) | ||
| I |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 61)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the net increase in cash for the year ended December 31, 2022, was a decrease of $542,511. This indicates that Cinnaholic used more cash than it generated during that period. This figure is derived from the statement of cash flows, which summarizes the movement of cash both into and out of the company. The statement categorizes these cash flows into operating, investing, and financing activities to provide a comprehensive view of how Cinnaholic manages its cash.
For a prospective franchisee, this information is crucial because it provides insight into Cinnaholic's financial stability and cash management practices. A significant decrease in cash could signal potential challenges in maintaining operations or investing in growth. It's important to consider this figure in conjunction with other financial metrics and qualitative factors to get a well-rounded understanding of the company's financial health.
It is also important to note that the net decrease in cash is not necessarily indicative of poor performance. It could be due to strategic investments in long-term assets or expansion initiatives. However, it warrants further investigation to understand the underlying reasons and potential implications for the franchisee's investment. Therefore, a prospective franchisee should inquire about the factors contributing to this decrease and Cinnaholic's plans to improve its cash flow in subsequent periods.