For Bath Tune Up, what financial instruments does the company's fair value measurement consist of?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's financial instruments consist of cash, accounts receivable, notes receivable, rebates receivable, and accounts payable. The fair values of cash, accounts receivable, rebates receivable and accounts payable approximate their carrying amounts because of the short maturity of these items. The Company's notes receivable approximates their fair value upon issuance as the interest on these instruments is tied to or approximates current market rates and are subsequently measured at amortized cost.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 51–52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, the company's financial instruments consist of cash, accounts receivable, notes receivable, rebates receivable, and accounts payable. The fair values of cash, accounts receivable, rebates receivable, and accounts payable are close to their carrying amounts due to their short maturity.
The notes receivable approximates their fair value upon issuance because the interest on these instruments is either tied to or approximates current market rates. These notes are subsequently measured at amortized cost.
For a Bath Tune Up franchisee, this means that the company's financial reporting relies on standard accounting practices to determine the value of its assets and liabilities. The short-term nature of items like cash and accounts receivable simplifies their valuation, while notes receivable are valued based on prevailing interest rates.