Do the Crave Cookies financial statements include any discussion of the impact of inflation?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounts Receivable
Accounts receivable are stated at the amount of consideration from customers of which the Company has an unconditional right to receive. The Company provides an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. As of December 31, 2023 and 2022, there was no allowance for credit losses recorded.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the provided excerpts do not contain a specific discussion about the impact of inflation on the company's financial statements. However, the notes to the financial statements do address how Crave Cookies handles estimates and assumptions that could be affected by economic conditions.
Specifically, the accounting policies note that the preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities. These estimates and assumptions are based on current economic conditions. This suggests that while inflation isn't explicitly mentioned, its potential effects are implicitly considered through these estimates.
Furthermore, the discussion of accounts receivable mentions that the company provides an allowance for credit losses based on a review of outstanding receivables, historical collection information, and existing economic conditions. This indicates that Crave Cookies considers economic factors when assessing the collectability of receivables, which could indirectly account for the effects of inflation on customers' ability to pay. A prospective franchisee should inquire with Crave Cookies about the specific procedures used to account for inflation and other economic factors in their financial forecasting and risk management.