What was the bad debt expense for Craters & Freighters in 2022?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| 5,413,239 | $ 5,414,139 |
Statements of Cash Flows
| Years Ended December 31, | 2023 | 2022 |
|---|---|---|
| Change in Cash and Cash Equivalents: | ||
| Cash Flows from Operating Activities: | ||
| Net Income | $ 2,633,230 $ | 2,437,747 |
| Adjustments to Reconcile Net Income to Net Cash and Cash Equivalents | ||
| From Operating Income: | ||
| Amortization Expense | 101,989 | 99,763 |
| Depreciation Expense | 26,134 | 21,995 |
| Gain on Sale of Fixed Assets | (15,729) | - |
| Gain on Sale of Marketable Securities | (841) | (3,643) |
| Bad Debt Expense | 10,000 | 24,928 |
| Non-Cash Lease Expense | 1,865 | 83,132 |
| Unrealized Holding (Gain) Loss on Marketable Securities | (97,174) | 69,301 |
| Reinvested Dividends | (13,827) | (13,279) |
| (Increase) Decrease in Assets: | ||
| Accounts Receivable | 138,330 | (159,098) |
| Prepaid Expenses and Deposits | (166,615) | 462 |
| (Decrease) Increase in Liabilities: | ||
| Accounts Payable | (179,894) | 225,116 |
| Accrued Bonus | (132,340) | 132,340 |
| Accrued Liabilities and Payables | 1,332 | (3,152) |
| Operating Lease Liability Change |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the bad debt expense for the company in 2022 was $24,928. This figure is part of the adjustments used to reconcile net income to net cash and cash equivalents from operating income. Bad debt expense represents the estimated amount of accounts receivable that Craters & Freighters does not expect to collect.
For a prospective franchisee, understanding the bad debt expense is crucial as it reflects the credit risk associated with Craters & Freighters's customers. A higher bad debt expense could indicate a more lenient credit policy or difficulties in collecting payments, which could impact the franchisee's cash flow. Monitoring this expense over time can provide insights into the financial health and stability of the franchise system.
Franchisees should inquire about Craters & Freighters's credit policies, collection procedures, and the factors contributing to bad debt expense. Understanding these aspects can help franchisees better manage their own credit risks and financial planning. Additionally, comparing the bad debt expense with industry averages can provide a benchmark for assessing the company's performance in managing credit and collections.