What was the change in accounts receivable for Kidokinetics in 2023?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
23, 2022, and 2021
| 2023 | 2022 | 2021 | |
|---|---|---|---|
| Cash flow from operating activities: | |||
| Net loss | $ (749,072) | $ (811,320) | $ (411,716) |
| Adjustments to reconcile net loss to | |||
| net cash used in operating activities: | |||
| Amortization | 25,446 | 22,001 | 11,191 |
| Depreciation | 11,400 | 11,400 | 1,900 |
| Amortization of right of use asset | 56,494 | 53,741 | - |
| Changes in operating assets and liabilities: | |||
| Accounts receivable | (446,453) | (498) | 2,530 |
| Deferred contract costs | (905,048) | (608,934) | - |
| Other non-current assets | - | - | (9,600) |
| Accounts payable | 394,700 | 285,300 | 60,075 |
| Accrued expenses | 97,201 | 41,609 | - |
| Credit card liability | (47,346) | 158,575 | 47,806 |
| Loans from shareholder | 3,347 | 1,498 | 18,226 |
| Operating lease liability | (57,509) | (53,016) | - |
| Deferred revenue | 1,465,557 | 884,778 | - |
| Net cash used in operating activities | (151,283) | (14 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, the accounts receivable experienced a significant change in 2023. The change in accounts receivable is detailed in the cash flow statement under cash flow from operating activities. In 2023, the accounts receivable decreased by $446,453. In contrast, the accounts receivable decreased by only $498 in 2022. This indicates a substantial increase in the collection of receivables or a significant adjustment in the accounts receivable balance during 2023 compared to the previous year.
For a prospective Kidokinetics franchisee, this information is crucial for understanding the company's financial health and its ability to manage its receivables. A large negative change in accounts receivable, as seen in 2023, could imply more efficient collection practices or a one-time adjustment. However, it is essential to investigate the reasons behind this change to ensure it reflects sustainable financial management rather than a temporary anomaly. Understanding the nature of accounts receivable and their impact on cash flow is vital for assessing the financial stability of Kidokinetics.
It is also important to note that accounts receivable primarily consist of amounts from franchisees for initial franchise fees, royalty fees, and advertising fees. The receivables are carried at original invoice amount less an estimate made for doubtful receivables. Management regularly evaluates individual customer receivables considering their financial condition, credit history, and current economic conditions. Accounts receivable are written off when deemed uncollectible, and recoveries of accounts receivable previously written off are recorded as income when received. As of December 31, 2023, the company had receivables of $446,951, while in 2022, the company had receivables of only $498. As of December 31, 2023, and 2022, the Company had no allowance for uncollectible accounts.