What was the net change in cash and cash equivalents for Fly Fitness in 2023?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Members' equity, beginning of year | 312,625 | | Members' equity, end of year | $ 146,051 |
STATEMENT OF CASH FLOWS
| For the Year Ended December 31 | 2023 |
|---|---|
| Increases (decreases) in cash and cash equivalents | |
| Cash flows from operating activities | $ (166,574) |
| Net income (loss) | |
| Adjustments to reconcile net loss to net cash used by | 12,500 |
| operating activities | |
| Amortization | |
| Increase in operating liabilities Accounts payable Credit cards payable Accrued payroll Deferred revenue | 5,200 7,853 2,405 50,000 |
| Net cash used by operating activities | $ (88,616) |
| NET CHANGE IN CASH A |
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, 2023, was a decrease of $88,616. The cash and cash equivalents at the beginning of the year was $203,544, and the cash and cash equivalents at the end of the year was $114,928.
This decrease indicates that Fly Fitness used more cash than it generated during its operating, investing, and financing activities throughout 2023. For a prospective franchisee, this could signal potential financial challenges within the company, especially if this trend continues. It's important to note that as of December 31, 2023, Fly Fitness had only issued a single franchise in Loveland, Colorado, which was not yet open, suggesting that the company's revenue streams may have been limited during this period.
It is important to consider the context of these figures. The decrease in cash and cash equivalents is related to cash flows from operating activities, which resulted in a net cash used of $88,616. This figure takes into account the net loss of $166,574, adjustments to reconcile the net loss, including amortization of $12,500, and increases in operating liabilities such as accounts payable ($5,200), credit cards payable ($7,853), accrued payroll ($2,405), and deferred revenue ($50,000).
Prospective franchisees should investigate the reasons behind the net loss and the use of cash in operating activities. Understanding the factors contributing to these financial results will help them assess the financial stability and future prospects of Fly Fitness. It would be prudent to inquire about the franchisor's plans to improve cash flow and profitability as the franchise network expands.