What was the net change in cash and cash equivalents for Fly Fitness in 2022?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
(155,540) | | Members' equity, beginning of year | 468,165 | | Members' equity, end of year | $ 312,625 |
STATEMENT OF CASH FLOWS
| For the Year Ended December 31 | 2022 |
|---|---|
| Increases (decreases) in cash and cash equivalents | |
| Cash flows from operating activities Net income (loss) | $ (155,540) |
| Adjustments to reconcile net loss to net cash used by operating activities | 12 500 |
| Amortization | 12,500 |
| Increase in operating liabilities | 125 |
| Credit cards payable Accrued payroll | 125 3,294 |
| Net cash used by operating activities | $ (139,621) |
| Cash flows from investing activities | |
| Cash paid for intangible assets | $ (125,000) |
| Net cash used by investing activities | $ (125,000) |
| NET CHA |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 44)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the net change in cash and cash equivalents for the year ended December 31, 2022, was a decrease of $264,621. This figure represents the overall change in Fly Fitness's cash position, taking into account cash flows from operating and investing activities. The cash and cash equivalents at the beginning of the year was $468,165, while the cash and cash equivalents at the end of the year was $203,544.
Specifically, Fly Fitness experienced negative cash flow from operating activities, totaling $139,621. This means that the company spent more cash than it generated from its core business operations during the year. Additionally, Fly Fitness used $125,000 in investing activities, primarily related to cash paid for intangible assets. This expenditure further contributed to the overall decrease in cash and cash equivalents.
For a prospective franchisee, this information indicates that Fly Fitness was not generating positive cash flow from its operations in 2022 and was investing heavily in intangible assets. While investing in assets can be a positive sign for future growth, the negative cash flow from operations could be a concern. A potential franchisee should investigate the reasons behind the negative operating cash flow and assess the company's plans to improve its financial performance. Understanding the nature of the intangible assets and their potential to generate future revenue is also crucial.
It is important to note that this data reflects Fly Fitness's financial performance at the corporate level and may not be indicative of the performance of individual franchise locations. However, it provides valuable insight into the overall financial health and stability of the franchisor, which can impact the support and resources available to franchisees.