What was the net amount of accounts receivable for the Gokhale Method in 2023?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
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| 2023 | ||
|---|---|---|
| Cash flows from operating activities: | ||
| Net income | $ | 3,735 |
| Adjustments to reconcile net income to net | ||
| cash provided by operating activities: | ||
| Changes in operating assets and liabilities | ||
| Accounts receivable | (11,987) | |
| Accounts payable and other current liabilities | 1,825 | |
| Deferred revenue | 40,870 | |
| Net cash provided by operating activities | 34,443 | |
| Net increase in cash | 34,443 | |
| Cash and cash equivalents - beginning of year | 120,141 | |
| Cash and cash equivalents - end of year | $ | 154,584 |
| Supplemental disclosures of cash flow information: | ||
| Taxes paid | $ | 800 |
| Interest paid | $ | - |
| int |
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 FDD, the Gokhale Method's accounts receivable decreased by $11,987 in 2023. This figure is part of the adjustments used to reconcile net income to net cash provided by operating activities. Accounts receivable primarily consists of net royalty receivables from franchises, teachers, or class fees collected by Gokhale Method Enterprise, Inc. (GME).
This decrease in accounts receivable suggests that Gokhale Method collected more of its outstanding receivables during 2023 compared to the previous year. This could be due to more efficient collection processes or changes in payment terms offered to franchisees and teachers. It's important to note that this change impacts the cash flow from operating activities, as a decrease in accounts receivable increases the cash provided by operations.
For a prospective franchisee, understanding the fluctuations in accounts receivable can provide insights into the financial health and operational efficiency of Gokhale Method. While a decrease in accounts receivable is generally positive, it's essential to consider the reasons behind the change and whether it reflects sustainable improvements in cash management. A potential franchisee should inquire about the typical payment terms for royalties and fees, as well as the franchisor's policies for managing and collecting receivables.
It is also important to note that the independent auditor's report indicated that the financial statements of Gokhale Method Institute, Inc. present fairly its financial position as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America.