What is the net operating income reported for Extreme Art Studio?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
| Extreme Art | |||
|---|---|---|---|
| Income | |||
| Total Income | |||
| Gross Profit | $ | 0.00 | |
| Expenses | |||
| Total Expenses | |||
| Net Operating Income | $ | 0.00 | |
| Other Income | |||
| 4800 Other Miscellaneous Income | |||
| 4850 Interest Income | 0.13 | ||
| Total 4800 Other Miscellaneous Income | $ | 0.13 | |
| Total Other Income | $ | 0.13 | |
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 operating income is reported as $0.00. This indicates that for the period examined, Extreme Art Studio's revenues were equal to its operating expenses, resulting in neither a profit nor a loss from its core business operations before considering other income or expenses. This figure is derived from the statement of operations included in the financial statements.
For a prospective franchisee, a net operating income of $0.00 could raise concerns. It suggests that the franchisor, Extreme Art Studio Franchising, LLC, was not generating profit from its primary business activities during the period covered by the financial statement. This could be due to various factors, such as high operating costs, low revenue generation, or a combination of both. It is important to note that this figure represents the franchisor's performance and may not directly reflect the potential profitability of an individual franchise unit.
However, the FDD also shows a net loss of $(7,621) and total operating expenses of $7,621. This discrepancy suggests that while the core operations broke even, other expenses or factors led to an overall loss. Additionally, the company had other income of $0.13, resulting in a net income of $0.13. This minimal net income, despite a break-even operating income, highlights the importance of examining all components of the income statement to understand the complete financial picture.
Given these figures, a potential franchisee should investigate further to understand the franchisor's business model, revenue streams, and cost structure. It would be prudent to ask Extreme Art Studio about the specific factors that contributed to the $0.00 net operating income and the overall net loss, as well as strategies for improving profitability. Understanding these aspects will be crucial in assessing the financial viability and potential risks associated with investing in an Extreme Art Studio franchise.