What was the (increase) decrease in prepaid expense for Crawlspace Medic in 2023?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
24 | $ | 216,112 | $ | 460,495 |
STATEMENTS OF CASH FLOWS CSM FRANCHISE GROUP, LLC
| 2023 | For the Years Ended December 31, 2022 | 2021 | |
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net income | $ 1,149,783 | $ 808,447 | $ 954,060 |
| Change in noncash rental assets and liability | (1,167) | - | - |
| Changes in operating assets and liabilities: | |||
| (Increase) decrease in franchisee fees receivable | (53,100) | 280,000 | (275,000) |
| Decrease in royalty fees receivable | - | 9,972 | 3,918 |
| (Increase) decrease in due from related parties | - | 9,599 | (9,599) |
| (Increase) decrease in prepaid expense | (21,437) | 6,918 | (12,168) |
| Increase (decrease) in accounts payable and | |||
| accrued expenses | 4,691 | (11,088) | 22,144 |
| Increase (decrease) in due to related party | 15,096 | (1,444) | (20,676) |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 1,093,866 | 1,102,404 | 662,679 |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Payment on related party financing | - | - | (21,460) |
| Member's withdrawals | (1,029,271) | (1,052,830) | (641,150) |
| NET CASH USED IN FINANCING ACTIVITIES | (1,029,271) | (1,052,830) | (662,610) |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 64,595 | 49,574 | 69 |
| Cash and cash equivalents at beginning of year | 22 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, the (increase) decrease in prepaid expenses in 2023 was ($21,437). This figure reflects the change in the company's prepaid expenses from the beginning to the end of the year. The parenthesis indicates a decrease in prepaid expenses.
For a prospective franchisee, prepaid expenses could include items like insurance premiums, rent, or advertising costs that Crawlspace Medic has paid in advance. A decrease in this account could mean that the company used up some of its prepaid services or adjusted its payment schedule for these items. It is important to note that this change impacts the overall cash flow from operating activities, as reflected in the financial statement.
Understanding changes in prepaid expenses helps franchisees assess the financial management practices of Crawlspace Medic. While a decrease in prepaid expenses itself isn't inherently negative, it's crucial to consider the context and reasons behind the change. Franchisees may want to inquire about the company's policies on prepaid expenses and how these are managed to optimize cash flow and operational efficiency.