What was the net change in cash and restricted cash for Golden Krust Caribbean Restaurant in 2023?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
100 | $ | (5,271,693) | $ | - | $ (5,101,593) | *No par value, 200 shares authorized, 100 shares issued and outstanding at December 31, 2022 and 2021.
GOLDEN KRUST FRANCHISING, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
| CASH FLOWS PROVIDED BY (USED FOR): | Year Ended December 31, 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) Financi |
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 consolidated statement of cash flows reveals specific figures regarding the net increase (decrease) in cash and restricted cash for the years ending December 31, 2023, and 2022. For the year 2023, the net increase in cash and restricted cash was approximately $144,000, while in 2022, there was a net decrease of approximately $582,000. This indicates a significant turnaround in the company's cash flow position from 2022 to 2023.
Specifically, the FDD outlines various factors contributing to these cash flow changes. These include cash flows from operating activities, investing activities, and financing activities. In 2023, operating activities provided cash of approximately $477,000, whereas in 2022, they used cash of approximately $599,000. Investing activities used cash of approximately $12,000 in 2023 and approximately $40,000 in 2022. Financing activities used cash of approximately $321,000 in 2023, while in 2022, they provided cash of approximately $57,000.
For a prospective franchisee, understanding these cash flow dynamics is crucial. The significant positive change in net cash from 2022 to 2023 could signal improved financial health and operational efficiency within Golden Krust Caribbean Restaurant. However, it's important to investigate the reasons behind these changes, such as improvements in operating income, changes in working capital management, or specific financing activities. Franchisees should also consider how these trends might impact their own restaurant's financial performance and sustainability. Reviewing these figures in the context of overall financial performance will provide a more complete picture.
It is also important to note the amounts of restricted cash held by Golden Krust. According to the FDD, $258,713 and $1,153,034 of restricted cash related to the Company's advertising fund, as of December 31, 2023 and 2022, respectively. This is important for a franchisee to understand because the advertising fund is used to pay for franchise related advertising and cannot be used to defray general operating expenses of the Company, except as otherwise described in the FDD.