What was the bad debt expense for Golden Krust Caribbean Restaurant in 2022?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
| 2023 | 2022 | |||
|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Net Income | $ 82,149 | $ 1,141,393 | ||
| Adjustments to Reconcile Net Income to Net Cash | ||||
| Used by Operating Activities: | ||||
| Depreciation and Amortization Expense | 71,983 | 91,007 | ||
| Noncash Lease Expense | 4,432 | 54,540 | ||
| Bad Debt Expense | 606,734 | 196,574 |
Source: Item 23 — RECEIPT (FDD pages 35–153)
What This Means (2024 FDD)
According to the 2024 Franchise Disclosure Document, Golden Krust Caribbean Restaurant's bad debt expense in 2022 was $196,574. This figure is part of the adjustments used to reconcile net income to net cash used by operating activities.
Bad debt expense represents the amount of accounts receivable that Golden Krust Caribbean Restaurant estimates will not be collected. This can arise from franchisees or other debtors failing to pay what they owe. A higher bad debt expense suggests that the company is having trouble collecting its receivables, which can impact its cash flow.
For a prospective franchisee, understanding the franchisor's bad debt expense can provide insights into the financial health of Golden Krust Caribbean Restaurant and the potential risks associated with outstanding payments from franchisees or other parties. It is important to note that in 2023, the bad debt expense increased significantly to $606,734. This increase could be a point of discussion with the franchisor to understand the reasons behind it and its potential impact on the franchise system.
Reviewing trends in bad debt expense over several years, as presented in the FDD, can offer a more comprehensive view of the company's financial stability and its ability to manage credit and collections effectively. This information, combined with other financial metrics, can help potential franchisees make an informed decision about investing in a Golden Krust Caribbean Restaurant franchise.