What was the amount of non-cash lease expense for Golden Krust Caribbean Restaurant in 2022?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
| CASH FLOWS PROVIDED BY (USED FOR): | 2022 | 2021 |
|---|---|---|
| OPERATING ACTIVITIES: | ||
| Net income (loss) | $ 1,141,393 | $ (659,030) |
| Adjustments to reconcile net income (loss) to net cash and | ||
| restricted cash (used for) provided by operating activities: | ||
| Related party loan forgiveness | - | (567,961) |
| Depreciation and amortization expense | 91,007 | 106,297 |
| Non-cash lease expense | 54,540 | - |
| Bad debt expense (recoveries) | 196,574 | (490,229) |
| Change in allowance for notes receivable | 14,999 | (61,613) |
| Loss on disposal of equipment | 3,400 | 14,800 |
| Changes in certain assets and liabilities: | ||
| Accounts receivable | (477,332) | 343,400 |
| Inventory | 3,715 | (2,414) |
| Prepaid expenses | 35,908 | (40,254) |
| Other noncurrent assets | 31,812 | (456) |
| Accounts payable | 277,304 | (56,591) |
| Accrued expenses | (2,369,929) | 2,087,305 |
| Deferred franchise fees | (95,050) | 85,408 |
| Other current liabilities | (38,144) | 12,604 |
| Deferral of employment tax deposits and payments | (50,438) | (50,433) |
| Employee retention credit | 580,958 | (580,958) |
| Net Cash (Used for) Provided By Operating Activities | (599,283) | 139,875 |
| INVESTING ACTIVITIES: | ||
| Purchases of property and equipment | (21,215) | (8,000) |
| Net Cash Used for Investing Activities | (21,215) | (8,000) |
| FINANCING ACTIVITIES: | ||
| (Decrease) increase in notes receivable | (87,246) | 189,000 |
| Decrease (increase) in due from related party | 322 | (49,000) |
| Increase (decrease) in due to related parties | 1,604,275 | (299,000) |
| Net Cash Provided by (Used for) Financing Activities | 1,517,351 | (159,000) |
| EFFECT OF FOREIGN CURRENCY EXCHANGE RATE ON CASH | 9,066 | (5,066) |
| NET CHANGE IN CASH AND RESTRICTED CASH | 905,919 | (32,191) |
| CASH AND RESTRICTED CASH: | ||
| Beginning of year | 451,809 | 484,000 |
| End of year | $ 1,357,728 | $ 451,809 |
Source: Item 23 — RECEIPT (FDD pages 35–153)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the non-cash lease expense for 2022 was $54,540. This figure is part of the adjustments made to reconcile net income to net cash used for operating activities. Non-cash expenses are accounting entries that do not involve an actual cash outflow during the period. In this case, it relates to the lease of property.
For a prospective franchisee, understanding non-cash lease expenses is crucial because it affects the overall financial performance of the franchise. While it doesn't represent an immediate cash payment, it reflects the economic reality of using a leased asset over time. This expense is added back to net income when calculating cash flow from operations because it reduced net income but did not involve a cash payment.
Franchisees should pay close attention to these non-cash adjustments as they provide a more accurate picture of the company's cash-generating ability. Reviewing these figures over multiple years, as presented in the FDD, can help potential franchisees identify trends and better assess the financial health and stability of Golden Krust Caribbean Restaurant.