What was the net cash used by operating activities for Extreme Art Studio?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
TATEMENT OF CASH FLOWS For the Year Ended December 31, 2023
| Cash flows from operating activities: Net loss | $ (7,621) |
|---|---|
| Net cash used by operating activities | (7,621) |
| Cash flows from financing activities | |
| Member contributions | 22,622 |
| Net cash provided by financing activities | 22,622 |
| Net change in cash and cash equivalents | 15,001 |
| Cash and cash equivalents at beginning of period | |
| Cash and cash equivalents at end of period | $ 15,001 |
| Supplemental disclosures |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, the net cash used by operating activities for the period ending December 31, 2023, was $(7,621). This indicates that the company's core business activities resulted in a cash outflow rather than an inflow during this period. In other words, Extreme Art Studio spent $7,621 more than it generated from its operations.
This figure is directly related to the net loss of $(7,621) also reported for the same period. A net loss often translates to negative cash flow from operations, as the business is spending more than it earns. This is not uncommon for a new franchise system in its early stages, as it invests in setting up its infrastructure and supporting its initial franchisees.
It's important to note that this is a snapshot of Extreme Art Studio's financial performance for a specific period. Prospective franchisees should review these figures in the context of the company's overall financial health, including its assets, liabilities, and equity, as well as its plans for future growth and profitability. Consulting with a financial advisor is recommended to fully understand the implications of these financial statements.