What was the allowance for credit losses for Coffee News at December 31, 2024?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
| December 31, 2024, 2023 and 2022 | ||||
|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||
| ASSETS | ||||
| Current assets | ||||
| Cash | $ 64,135 | $ 66,796 | $ 94,422 | |
| Accounts receivable, net of reserve for current expected credit | ||||
| losses of $80,000 in 2024 and $120,000 in 2023 and 2022 | 26,049 | 38,558 | 23,979 | |
| Total current assets | 90,184 | 105,354 | 118,401 |
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, the allowance for current expected credit losses was $80,000 in 2024. This figure represents the company's estimate of potential losses from franchisees' accounts receivable. This allowance is a contra-asset account, reducing the stated value of accounts receivable to reflect the amount Coffee News realistically expects to collect.
For a prospective franchisee, this indicates that Coffee News acknowledges some risk in collecting payments from its franchisees. The allowance suggests that Coffee News has taken a conservative approach in valuing its accounts receivable, which can provide a more accurate picture of the company's financial health.
It's important to note that the allowance for credit losses can fluctuate from year to year, depending on factors such as the overall economic climate and the financial stability of Coffee News franchisees. Franchisees should monitor these figures in future FDDs to assess the credit risk associated with Coffee News's revenue streams.