What was the change in contract assets for Kitchen Solvers in 2022?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
1 | 0 | | TN | 0 | 1 | 0 | | MN | 0 | 1 | 0 | | TOTAL | 0 | 3 | 0 |
Statements of Cash Flows
Years Ended December 31, 2024, 2023, and 2022
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Increase (decrease) in cash: | |||
| Cash flows from operating activities | |||
| Net income | $ 464,580 | $ 210,640 | $ 232,257 |
| Adjustments to reconcile net income to net | |||
| cash provided by operating activities: | |||
| Depreciation | 10,880 | 6,555 | 1,585 |
| Noncash lease expense | 40,121 | 10,262 | - |
| Changes in operating assets and liabilities: | |||
| Accounts receivable | 75,001 | 1,889 | (47,979) |
| Accounts receivable - related party | (174,152) | - | - |
| Contract assets | (61,597) | (107,296) | (194,671) |
| Advances receivable | - | 74,472 | 75,000 |
| Other receivable | - | 3,260 | (3,260) |
| Inventory | (14,536) | (14,106) | - |
| Prepaid expenses | 16 | (2,293) | - |
| Accounts payable | 31,571 | (38,816) | 55,390 |
| Accrued and other liabilities | 17,806 | - | - |
| Deferred revenue | 12,268 | 76,042 | - |
| Contract liabilities | 229,411 | 171,452 | 275,741 |
| Lease liabilities - operating | (39,479) | (10,529) | - |
| Net change in cash from operating activities | 591,890 | 381,532 | 394,063 |
| Cash flows from investing activities: | |||
| Purchases of property and equipment | (53,517) | (73,253) | - |
| Net change in cash from investing activities | (53,517) | (73,253) | - |
| Cash flows from financing activities | |||
| Note payable - Officer | 2,455 | (16,126) | 18,049 |
| Proceeds from long-term debt | - | 56,700 | - |
| Principal payments on long-term debt | (18,523) | (13,020) | - |
| Member distributions | (304,910) | (204,000) | (409,849) |
| Net change in cash from financing activities | (320,978) | (176,446) | (391,800) |
| Net change in cash | 217,395 | 131,833 | 2,263 |
| Cash, beginning of year | 192,541 | 60,708 | 58,445 |
| Cash, end of year | $ 409,936 | $ 192,541 | $ 60,708 |
| Supplemental cash flow information: | |||
| Cash paid during the year for: | |||
| Interest | $ 2,602 | $ 3,236 | $ - |
| Operating cash flows from operating lease liabilities | $ 41,121 | $ 40,651 | $ 33,613 |
| Noncash reconciling items: | |||
| Equipment acquired with debt issuan |
Source: Item 21 — Financial Statements (FDD pages 48–49)
What This Means (2025 FDD)
According to Kitchen Solvers' 2025 Franchise Disclosure Document, the contract assets experienced a decrease of $194,671 in 2022. This figure is derived from the cash flow statement, which reconciles net income to net cash provided by operating activities. The contract assets line item reflects adjustments made to account for the difference between revenue recognized and cash received.
For a prospective Kitchen Solvers franchisee, this decrease in contract assets suggests that the company collected less cash than it recognized as revenue during that period. This could be due to various factors, such as changes in payment terms offered to customers or delays in collecting payments. Understanding the reasons behind this change is crucial for assessing the financial health and operational efficiency of Kitchen Solvers.
It's important to note that this figure represents the net change in contract assets for the entire Kitchen Solvers system, not just an individual franchise. A franchisee's own contract assets may vary depending on their specific business operations and customer base. Therefore, it is advisable for potential franchisees to inquire about the factors that contributed to this decrease and how Kitchen Solvers manages its contract assets to ensure healthy cash flow.