What was the net change in cash and cash equivalents for Fly Fitness during the year 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 2022 was a decrease of $264,621. The beginning cash and cash equivalents for 2022 was $468,165, while the cash and cash equivalents at the end of the year was $203,544.
This decrease in cash and cash equivalents indicates that Fly Fitness spent more cash than it generated during the year. This could be due to a number of factors, such as investments in intangible assets or operational losses. For instance, the document shows Fly Fitness used $125,000 in cash for investing activities related to intangible assets.
A prospective franchisee should consider this significant decrease in cash when evaluating the financial health of Fly Fitness. It's important to investigate the reasons behind this decrease and assess whether it is a temporary situation or a sign of potential financial instability. Understanding the franchisor's cash flow management and strategies for improving financial performance is crucial before investing in a Fly Fitness franchise.
It is also important to note that the company had no franchises issued or opened as of December 31, 2022. This could be a contributing factor to the net loss for the year.