What was the change in inventory for Kitchen Solvers in 2023?
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 issuance | $ - | $ 56,700 | $ - |
| ROU asset obtained in exchange for new | |||
| operating lease liabilities | $ - | $ 43,067 | $ 92,688 |
Notes to Financial Statements
See Independent Auditor's Report
Note 1 Summary of Significant Accounting Policies
Principal Business Activity
KS La Crosse Investment, LLC (the "Company") is a franchisor of retail outlets in cabinetry. The majority of the Company's revenue results from initial sales and continuing franchise fees and rebills.
During 2023, the Company began manufacturing and selling cabinets to its franchisees. The Company's raw materials are readily available, and the Company is not dependent on a single or few suppliers.
Basis of Accounting
The financial statements of the Company have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities in accordance with accounting principles generally accepted in the United States of America (GAAP).
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all deposits in financial institutions with a maturity of three months or less to be cash equivalents.
Accounts Receivable
The Company considers accounts receivable to be fully collectible; according, no allowance for doubtful accounts is recorded. If amounts become uncollectible, they are charged to operations when that determination is made.
Revenue and Revenue Recognition
The Company recognizes revenue from franchisees for continuing services as they are provided. The performance obligation consists of providing continuous access to the CRM advertising, email, and reporting system, as well as providing continuous access to all licenses and products of the Company, and is recognized monthly. The fees consist of a monthly technology fee of $264, and monthly business development and royalty fees, which are variable and based on sales of the franchisees. A nonrefundable initial franchise fee is required of each new franchisee and is recognized over the life of the franchisee agreement, which is generally 10 years.
Product sales are recognized when the product is shipped, and all obligations of the Company have been satisfied.
Property, Equipment, and Depreciation
Property, plant and equipment is stated at cost. Expenditures for repairs and maintenance are charged to income as incurred.
Source: Item 21 — Financial Statements (FDD pages 48–49)
What This Means (2025 FDD)
According to Kitchen Solvers's 2025 Franchise Disclosure Document, the change in inventory in 2023 was a decrease of $14,106. This figure is part of the cash flow statement, specifically within the changes in operating assets and liabilities. This indicates that Kitchen Solvers used $14,106 more of its inventory than it purchased during the 2023 fiscal year.
For a prospective franchisee, this information is useful in understanding how Kitchen Solvers manages its inventory and its impact on cash flow. A decrease in inventory could suggest efficient inventory management or potentially indicate challenges in maintaining adequate stock levels to meet customer demand. It is important to note that this is a single-year snapshot and should be evaluated in the context of broader trends and industry benchmarks.
Furthermore, the FDD also lists the inventory asset value for 2023 as $14,106. This represents the total value of Kitchen Solvers's inventory on hand at the end of that year. The fact that the change in inventory matches the total inventory value could indicate that Kitchen Solvers started the year with minimal inventory, or that there were significant adjustments made during the year. A potential franchisee should inquire about the typical inventory levels and management practices to ensure they align with their operational expectations.