What was the allowance for doubtful accounts for Deck Medic in 2022?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
tely $110,883 and $125,496 in cash in its operating bank account respectively.
4. ACCOUNTS RECEIVABLES
At the years ended December 31, 2022 and 2021, Accounts Receivables consisted of the following:
| 2022 | 2021 | |
|---|---|---|
| initial franchise fees receivables | $25,530 | $28,955 |
Source: Item 23 — RECEIPTS (FDD pages 43–228)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, the allowance for doubtful accounts in 2022 was ($12,765). This figure represents an estimate of the amount of accounts receivable that Deck Medic may not be able to collect.
An allowance for doubtful accounts is a contra-asset account that reduces the total amount of accounts receivable reported on the balance sheet to the amount expected to be collected. This accounting practice reflects the risk that some customers may not pay their outstanding invoices. The allowance is based on factors such as historical collection rates, the age of outstanding receivables, and the current economic climate.
For a prospective Deck Medic franchisee, this information provides insight into the company's financial health and its ability to manage credit risk. A significant allowance for doubtful accounts could indicate potential issues with the quality of receivables or the effectiveness of collection efforts. It's worth noting that in 2021, the allowance for doubtful accounts was $7,125, which is a notable difference from the 2022 figure. This increase could be due to a variety of factors, such as changes in credit policies or economic conditions.