What is the total value of liabilities and equity reported for Extreme Art Studio?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
| 2000 Accounts Payable | 0.00 |
|---|---|
| Total Accounts Payable | $ 0.00 |
| Credit Cards | |
| Total Credit Cards | $ 0.00 |
| Other Current Liabilities | |
| 2100 Payroll Liabilities | 0.00 |
| 2408 WF Line of Credit 2314 | 0.00 |
| Total 2450 Deferred Revenue | $ 0.00 |
| Total Other Current Liabilities | $ 0.00 |
| Total Current Liabilities | $ 0.00 |
| Long-Term Liabilities | |
| 2430 Note Payable - Long Term | 15,000.00 |
| Total Long-Term Liabilities | $ 15,000.00 |
| Total Liabilities | $ 15,000.00 |
| Equity | |
| 3200 Members Equity | 0.00 |
| 3202 Members Equity- Retained Earnings | 1.08 |
| Net Income | 0.13 |
| Total Equi |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, the total liabilities and equity as of December 31, 2023, was $15,001.21. This figure represents the sum of all the company's obligations to creditors (liabilities) and the owner's stake in the company (equity). The liabilities consist of $15,000.00 in long-term liabilities, while the equity comprises $0.00 in member's equity, $1.08 in member's equity-retained earnings, and $0.13 in net income, totaling $1.21.
For a prospective Extreme Art Studio franchisee, this balance sheet provides a snapshot of the company's financial health at the end of 2023. A significant portion of the liabilities is attributed to long-term debt, which could indicate the company has invested in assets or is financing its operations. The equity section shows a relatively small amount, suggesting the business may still be in its early stages of growth or is primarily funded by debt rather than owner contributions.
It's important to note that the company's total assets also amount to $15,001.21, balancing with the total liabilities and equity. This is a fundamental accounting equation where assets always equal the sum of liabilities and equity. The assets are composed of $15,001.21 in total current assets, with the majority held in bank accounts. There are no fixed assets or other assets reported.
Overall, the financial statement indicates that Extreme Art Studio had minimal activity in its early stages, with a small net income of $0.13. Prospective franchisees should further investigate the nature of the long-term liabilities and understand how the company plans to grow its equity in the future. Reviewing subsequent financial statements and understanding the company's business plan would provide a more comprehensive view of its financial stability and growth potential.