What was the increase (decrease) in due to related parties for Golden Krust Caribbean Restaurant in 2023?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
nd 2022.
(6)
GOLDEN KRUST FRANCHISING, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2023 AND 2022
| 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 | |
| Change in Allowance for Notes Receivable | - | 14,999 | |
| Loss on Disposal of Equipment | 92,339 | 3,400 | |
| (Increase) Decrease in Operating Assets: | |||
| Accounts Receivable | (614,033) | (477,332) | |
| Inventory | 5,837 | 3,715 | |
| Prepaid Expenses | 2,638 | 35,908 | |
| Other Noncurrent Assets | - | 31,812 | |
| Increase (Decrease) in Operating Liabilities: | |||
| Accounts Payable | (244,516) | 277,304 | |
| Accrued Expenses | (19,736) | (2,369,929) | |
| Deferred Franchise Fees | (36,508) | (95,050) | |
| Other Current Liabilities | (13,254) | (38,144) | |
| Deferral of Employment Tax Deposits and Payments | - | (50,438) | |
| Employee Retention Credit | - | 580,958 | |
| Net Cash Used by Operating Activities | (61,935) | (599,283) | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Purchases of Property and Equipment | (25,444) | (21,215) | |
| Net Cash Used by Investing Activities | (25,444) | (21,215) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Increase (Decrease) in Notes Receivable | 25,274 | (87,246) | |
| Borrowings on Note Payable - Related Party | 5,180,961 | - | |
| Repayments on Note Payable - Related Party | (84,410) | - | |
| Increase (Decrease) in Due from Related Party | (24,491) | 322 | |
| Increase (Decrease) in Due to Related Parties | (5,598,977) | 1,604,275 | |
| Net Cash Provided (Used) by Financing Activities | (501,643) | 1,517,351 | |
| EFFECT OF FOREIGN CURRENCY EXCHANGE RATE ON CASH | - | 9,066 | |
| NET CHANGE IN CASH AND RESTRICTED CASH | (589,022) |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the increase (decrease) in due to related parties in 2023 was a decrease of $5,598,977.
This figure is part of the cash flow from financing activities. It reflects the net change in amounts owed to related parties, which in this case represents a significant decrease in the company's liability to its related parties during the 2023 fiscal year.
For a prospective franchisee, this indicates a major shift in the financial relationship between Golden Krust Caribbean Restaurant and its related entities. A large decrease in amounts due to related parties could suggest improved financial stability or a restructuring of debt obligations. It is important to investigate the reasons behind this decrease to fully understand its implications.
It would be prudent for a potential franchisee to seek clarification from Golden Krust Caribbean Restaurant regarding the nature of these related party transactions and the reasons for the substantial decrease in the amount due to related parties. Understanding these details can provide a clearer picture of the company's financial health and its dealings with affiliated entities.