What was the net cash used by operating activities for Golden Krust Caribbean Restaurant in 2023?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
nd 2022.
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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 net cash used by operating activities in 2023 was approximately ($61,935). This indicates that the company's core business operations resulted in a cash outflow during that year.
Several factors contributed to this net cash usage. These include a net income of $82,149, which was offset by adjustments such as depreciation and amortization expense ($71,983), noncash lease expense ($4,432), and bad debt expense ($606,734). Additionally, changes in operating assets and liabilities, such as accounts receivable (($614,033)) and accounts payable (($244,516)), further influenced the cash flow from operations.
For a prospective franchisee, this information highlights the importance of understanding the factors that impact Golden Krust Caribbean Restaurant's cash flow. While the company reported a net income, the cash flow from operations was negative, suggesting potential challenges in managing working capital or collecting receivables. Franchisees should carefully evaluate these factors and consider their own ability to manage cash flow effectively.
It's also worth noting that the 2022 net cash used by operating activities was ($599,283). The prospective franchisee should inquire about the reasons for these figures and what steps Golden Krust Caribbean Restaurant is taking to improve cash flow from operations and ensure long-term financial stability.