What was the change in prepaid expenses for Gold Star in 2023?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| Years Ended December 31, | |||
|---|---|---|---|
| 2024 2023 | (Restated) | ||
| Cash Flows From Operating Activities | |||
| Net Income | $ 2,498,270 $ 1,595,317 | $ 1,936,301 | |
| Reconciliation of Net Income with | |||
| Cash Flows From Operations | |||
| Depreciation | 1,249,072 930,216 | 807,295 | |
| Amortization | 63,323 | 70,168 69,297 | |
| Amortization on Loan Cost | 1 3,492 4 1,695 | 1 2,973 | |
| Loss on Disposal of Property and Equipment | - 4 4,694 | 5,367 | |
| Gain on Early Termination of Lease | - (26,298) | - | |
| Changes In | |||
| Accounts Receivable, Net | 206,833 292,502 | 524,429 | |
| Other Receivables | (589) 229,976 | (67,494) | |
| Inventory | 4 83,139 (354,258) | (479,542) | |
| Prepaid Expenses | 272,464 227,946 | (269,624) |
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the change in prepaid expenses in 2023 was $227,946. This figure represents the net effect of all transactions affecting prepaid expenses during that year.
Prepaid expenses are payments a company makes for goods or services that will be received in the future. Common examples include insurance premiums, rent, and advertising. Since the benefit hasn't been fully realized yet, the expense is initially recorded as an asset on the balance sheet. As the benefit is received over time, the prepaid expense is gradually recognized as an actual expense on the income statement.
A prospective Gold Star franchisee should pay close attention to changes in prepaid expenses as they can impact the cash flow and profitability of the business. Increases in prepaid expenses may indicate upcoming costs or investments, while decreases could signal the consumption of previously paid-for services. Understanding these trends can help franchisees better manage their finances and plan for future expenses.