What was the net cash used by operating activities for Mrcool in 2023?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
t loss | (200,959) | (18,602) | | Member contributions (note F) | 69,421 | 0 | | Ending balance | (155,165) | (23,627) |
MRCOOL FRANCHISING, LLC STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,
| 2024 | 2023 | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net loss | $ (200,959) | $ (18,602) |
| Adjustments to reconcile net loss to net cash | ||
| used by operating activities: | ||
| Changes in assets and liabilities: | ||
| (Increase) decrease in assets: | ||
| Accounts receivable | (299,762) | 0 |
| Inventories | (677) | 0 |
| Prepaid expenses | (83) | (1,080) |
| Increase (decrease) in liabilities: | ||
| Accounts payable | 220,304 | 0 |
| Provision for income taxes | 0 | 175 |
| Deferred revenue, current | 5,000 | 0 |
| Deferred revenue, non-current | 42,500 | 0 |
| Net cash used by operating activities | (233,677) | (19,507) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from related party payables | 0 | 25,648 |
| Payments on related party payables | (25,379) | (5,294) |
| Member contributions | 69,421 | 0 |
| Borrowings from line of credit, net of repayments | 330,000 | 0 |
| Net cash provided by financing activities | 374,042 | 20,354 |
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, the net cash used by operating activities in 2023 was $(19,507). This figure reflects the cash outflow resulting from the company's core business operations during that year. It's important to note that this number is derived by adjusting the net loss of $(18,602) to account for changes in assets and liabilities.
Specifically, the adjustments include changes in assets like prepaid expenses which decreased by $(1,080), and changes in liabilities such as a provision for income taxes of $175. These adjustments reconcile the net loss to the actual cash used in operating activities.
For a prospective franchisee, this indicates that Mrcool's operations required more cash than they generated in 2023. This could be due to various factors, such as initial investments in infrastructure, marketing, or other startup costs. It is important to consider this in conjunction with other financial metrics and trends to assess the overall financial health and stability of the company. A potential franchisee should inquire about the reasons for negative cash flow and strategies to improve it.