What was the net increase or decrease in cash for Hyper Kidz in 2022?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
68 | | 1,468 | | Net income | | 52,292 | | | | - | | BALANCE, DECEMBER 31, 2022 | $ | 55,630 | $ | (176,919) | $ | (173,581) |
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 BOOMERANG FRANCHISE, LLC STATEMENTS OF CASH FLOWS
| 2022 | 2021 | 2020 | |
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net income) | $ 52,292 | $ 46,173 | $ 110,241 |
| Adjustments to reconcile net income to net | |||
| cash provided by operating activities: | |||
| Recognition of non-refundable deferred franchise sales | (4,279) | (3,950) | (6,913) |
| Changes in assets and liabilities: | |||
| Accounts receivable | (18,006) | ||
| Accrued expense | 2,993 | 820 | - |
| Royalties collected in advance | (36,612) | 36,612 | - |
| Non-refundable deferred franchise fees | 39,500 | ||
| Net cash provided by operating activities | 35,888 | 79,655 | 103,328 |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Proceeds from notes payable | - | 79,000 | - |
| Advances to affiliates, net | 1,468 | (163,377) | - |
| Member contributions | - | 1,800 | - |
| Member distributions | (30,000) | - | (100,386) |
| Net cash (used) by financing activities | (28,532) | (82,577) | (100,386) |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the net increase in cash for the company in 2022 was $7,356. This figure represents the overall change in the company's cash position during that year, taking into account all cash inflows (increases) and cash outflows (decreases) from various activities. This information is derived from the statement of cash flows, which provides a summary of all cash transactions during the specified period. The beginning cash balance for 2022 was $20, and the ending cash balance was $7,376.
The statement of cash flows categorizes cash flows into three main activities: operating activities, investing activities, and financing activities. The net increase in cash is the sum of the net cash flows from these three activities. In 2022, Hyper Kidz's net cash provided by operating activities was $35,888, and the net cash used by financing activities was ($28,532).
For a prospective franchisee, understanding the cash flow trends of the franchisor is crucial. A positive net increase in cash, as seen in Hyper Kidz's 2022 financials, generally indicates that the company is generating more cash than it is using. This can be a sign of financial stability and efficient management. However, it's important to analyze the components of the cash flow statement to understand the sources and uses of cash. For example, a large increase in cash from financing activities might indicate that the company is relying on debt to fund its operations, which could be a potential risk. A prospective franchisee should also compare these figures to previous years and industry benchmarks to assess the company's financial performance and stability.