What was the bad debt expense (recoveries) 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: |
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 bad debt expense (recoveries) for 2022 was $196,574. This figure is part of the adjustments used to reconcile net income to net cash. It is important to note that this is an expense, meaning it reflects an increase in expenses or a reduction in income due to uncollectible debts.
For a prospective franchisee, understanding bad debt expense is crucial as it reflects the financial health and stability of Golden Krust Caribbean Restaurant. A high bad debt expense could indicate issues with franchisees not paying royalties or other fees, which could impact the franchisor's ability to support the franchise system. Conversely, a lower bad debt expense suggests better financial management and a more stable revenue stream.
Franchisees should consider this figure in the context of overall revenues and expenses. It's also important to compare this figure with previous years to identify any trends. A significant increase in bad debt expense could be a red flag, warranting further investigation into the financial stability of the franchise system. It is also important to note that the 2021 bad debt expense (recoveries) was listed as ($490,229), meaning that Golden Krust Caribbean Restaurant recovered more than they expensed in bad debt.