What was the retained earnings amount for Endless Summer Sweets as of the balance on April 30, 2023?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
Endless Summer Sweets Franchising Inc. Statements of Stockholder's Equity For the Period Ended December 31, 2023
| Common Stock | |||||
|---|---|---|---|---|---|
| Number of | Retained | ||||
| Shares | Amount | Earnings | Total | ||
| Share Issued | 2,000 | $ | 2,000 | - | $ 2,000 |
| Net Income | - |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to Endless Summer Sweets's 2024 Franchise Disclosure Document, the balance sheet includes a statement of stockholder's equity. As of April 30, 2023, Endless Summer Sweets had retained earnings of $(15,648). This means that the company had an accumulated deficit of $15,648. This is calculated after accounting for net income of $(15,648) during the period.
For a prospective franchisee, this figure indicates the accumulated profits or losses of Endless Summer Sweets since its inception. A negative retained earnings balance, as is the case here, suggests that the company has experienced net losses that have not been offset by profits. This is not uncommon for a new franchise system.
It is important to note that these figures reflect the financial position of Endless Summer Sweets Franchising Inc. as of April 30, 2023, and the period leading up to it. Franchisees should review the complete financial statements and consult with a financial advisor to fully understand the implications of these figures.