At what value are the merchandise inventories stated for Batteries Plus Bulbs?

According to the 2025 Batteries Plus Bulbs FDD, the franchise states its merchandise inventories at the lower of cost or net realizable value. The cost is determined using either the first-in, first-out (FIFO) method for Ascent, or the average-cost method for Batteries Plus Bulbs operated stores.

For a prospective franchisee, this means the value of the inventory you hold is subject to these accounting methods. The FIFO method assumes that the first units purchased are the first ones sold, which can impact the cost of goods sold and taxable income, especially during periods of inflation or deflation. The average-cost method calculates a weighted average cost for all inventory items and uses this average to determine the cost of goods sold and ending inventory value.

Batteries Plus Bulbs's method of inventory valuation affects the financial statements and reported profitability. Understanding these accounting policies is crucial for franchisees to accurately assess their store's financial performance and manage their inventory effectively. Franchisees should consult with financial professionals to fully understand the implications of these inventory valuation methods on their specific business operations.