What was the change in accounts receivable for Craters & Freighters in 2023?
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) |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, the change in accounts receivable in 2023 was an increase of $138,330. This figure is part of the adjustments used to reconcile net income to net cash and cash equivalents from operating income. It reflects the difference in the money owed to Craters & Freighters by its customers between the beginning and end of the year.
An increase in accounts receivable suggests that Craters & Freighters sold more goods or services on credit during 2023 than it collected in cash. This can be a sign of growth, but it also means that the company has more money tied up in outstanding invoices. Prospective franchisees should consider how changes in accounts receivable might affect their own cash flow, especially during the early stages of operation.
Franchisees should inquire about Craters & Freighters's credit policies and collection practices to understand how they manage accounts receivable. Understanding these practices can help a franchisee better manage their own finances and anticipate potential cash flow challenges. It's also worth noting that Craters & Freighters recognized a bad debt expense of $10,000 in 2023, which is related to uncollectible accounts receivable. This indicates that not all receivables will be successfully converted to cash.