What was the amount of Floors To Go's accounts receivable at the end of the year 2023?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
e the receivables have been outstanding, historical collection experience, current market conditions and forecasted economic and business environments. Amounts that are deemed to be uncollectible are written off against the allowance for credit losses. The expense associated with the allowance for credit lo
Source: Item 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to Floors To Go's 2025 Franchise Disclosure Document, the accounts receivable at the end of 2023 was $461,463. This figure represents the total amount of money owed to Floors To Go by its customers or franchisees for goods or services provided on credit. Accounts receivable are considered current assets on the company's balance sheet, reflecting short-term obligations due to the company. Floors To Go's accounting practices recognize revenue when services are performed, even if cash payment hasn't been received, leading to an accounts receivable balance.
For a prospective franchisee, understanding the accounts receivable is crucial as it reflects the financial health and efficiency of Floors To Go in collecting payments. A higher accounts receivable balance might indicate potential issues with payment collection or lenient credit terms, while a lower balance suggests efficient collection practices. It is important to note that the FDD also mentions that accounts receivable are customer obligations due under normal trade terms, generally requiring payment within 30 to 60 days from the invoice date.
Furthermore, the FDD also states that management estimates an allowance for expected credit losses based on the amount it expects to collect from customers, considering factors like the length of time receivables have been outstanding and historical collection experience. This allowance is important because it reduces the stated value of accounts receivable to reflect the realistic amount Floors To Go expects to collect, accounting for potential bad debts. The expense associated with the allowance for credit losses was $35,724 for the year ended December 31, 2023.
Therefore, while the accounts receivable balance provides a snapshot of what is owed to Floors To Go, prospective franchisees should also consider the company's credit policies, collection practices, and allowance for credit losses to gain a comprehensive understanding of the company's financial position and risk management related to accounts receivable.