What was the depreciation expense for City Wide in 2022?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
| Operating Activities | $ 14,196,288 | $ 10,941,550 | ||||
|---|---|---|---|---|---|---|
| Net income | $ 19,161,078 | $ 14,196,288 | $ 10,941,550 | |||
| Items not requiring (providing) cash | ||||||
| Depreciation | 999,912 | 1,063,068 | 1,095,919 | |||
| Bad debt expense | 160,526 | 54,103 | 13,153 | |||
| Noncash operating lease cost | 94,315 | 91,359 | 88,451 | |||
| Loss on abandonment of software subscription | 1,454,554 | - | - | |||
| Effect of foreign currency translation (gain) loss | 39,507 | (6,653) | 26,999 | |||
| Deferred compensation | 455,292 | 614,155 | - | |||
| Changes in | ||||||
| Accounts receivable | (838,659) | (645,018) | (691,842) | |||
| Deferred franchise costs and prepaid expenses | (319,698) | 46,486 | (241,676) | |||
| Inventory | 58,725 | (75) | (8,355) | |||
| Software subscription | (631,500) | (891,054) | - | |||
| Accounts payable | 3,969,091 | 2,603,540 | 3,211,061 | |||
| Accrued expenses | 920,639 | 113,353 | 363,757 | |||
| Operating lease liabilities | (182,963) | (180,007) | (177,099) | |||
| Deferred franchise revenue and other deferred income | 503,293 | 555,702 | 1,223,390 | |||
| Deferred compensation | (340,500) | (144,863) | 119,200 | |||
| Refundable advance | (1,618,485) | 2,041,208 | - | |||
| Net cash provided by operating activities | 23,885,127 | 19,511,592 | 15,964,508 |
Source: Item 23 — RECEIPT (FDD pages 65–271)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the depreciation expense for 2022 was $1,095,919. The document provides a breakdown of various financial activities, including operating, investing, and financing activities, along with supplemental cash flow information. Depreciation is listed as an item not requiring or providing cash within operating activities.
Depreciation is a non-cash expense that reflects the reduction in value of an asset over time. It is important for franchisees to understand depreciation because it affects the net income and the overall financial health of the franchise. While it doesn't involve an actual outflow of cash, it impacts the taxable income, and consequently, the tax liability of the business.
For a prospective City Wide franchisee, this figure provides insight into the company's accounting practices and how it manages its assets. Understanding the depreciation expense can help franchisees better assess the financial performance and stability of City Wide. It's also useful for comparing City Wide to other franchise opportunities and for making informed investment decisions.