What was the allowance for credit losses for Precision Door Service at the end of the period in 2024?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
December 31, 2024 | | | | and 2023, respectively | | | | Amounts due after one year, net of allowance for credit losses | | | | of $2,105 | | | | and $2,155 as of December 31, 2024 | | | | and 2023, | | | | respectively | 13,577 | 15,894 | | Total trade notes receivable, net | $ 21,353 | $ 25,671 |
An analysis of the changes in trade notes receivable is as follows:
| Year Ended December 31, | |||||
|---|---|---|---|---|---|
| 2024 | 2023 | ||||
| Gross trade notes receivable, beginning of period | 28,290 | $ | 30,228 | ||
| Principal payments receive |
Source: Item 21 — Financial Statements (FDD page 91)
What This Means (2025 FDD)
According to Precision Door Service's 2025 Franchise Disclosure Document, the allowance for credit losses at the end of 2024 was $3,272. This figure represents the company's estimate of uncollectible trade notes receivable, which are amounts owed to Precision Door Service by its customers. The allowance is a contra-asset account, meaning it reduces the gross amount of trade notes receivable to arrive at the net realizable value. This gives a more accurate picture of what the company expects to actually collect. The beginning allowance for credit losses in 2024 was $2,619.
The allowance for credit losses is an important metric for prospective franchisees to consider because it reflects the credit risk associated with Precision Door Service's customer base. A higher allowance for credit losses may indicate that the company has a more difficult time collecting payments from its customers, which could impact a franchisee's cash flow. The change in the allowance for credit losses from the beginning to the end of the year is affected by provisions for credit losses, net write-offs, and foreign currency translation.
In 2024, Precision Door Service's gross trade notes receivable at the end of the period was $24,625, while the net trade notes receivable was $21,353. This difference of $3,272 is due to the allowance for credit losses. Understanding these figures helps a franchisee assess the financial health and stability of Precision Door Service. It is a common accounting practice to maintain an allowance for credit losses, and the specific methodology for determining the allowance can vary depending on the company and industry.