For Beard Papas, what is considered a cash equivalent?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
t the financial statements were available to be issued. Management has determined that there are no subsequent events required to be recorded or disclosed.
3. Concentrations of Risks
Credit Risk
Financial instruments which potentially subject the Company to concentration of credit risk are primarily cash and cash equivalents, and accounts receivable. The Company places its cash and cash equivalents in accounts with three financial institutions that are participating members of the U.S. Federal Deposit Insurance Corporation ("FDIC"). During the years ended December 31, 2024 and 2023, the Company's cash and cash equivalent balances exceeded the FDIC limit from time to time. The Company's cash and cash equivalents balances as of December 31, 2024, with FDIC member institutions exceeded the total amounts insured by FDIC's general deposit insurance rules
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, cash equivalents are considered alongside cash as financial instruments that potentially subject the company to credit risk. Beard Papas places its cash and cash equivalents in accounts with three financial institutions that are participating members of the U.S. Federal Deposit Insurance Corporation (FDIC).
The FDD indicates that during the years ended December 31, 2024 and 2023, Beard Papas's cash and cash equivalent balances sometimes exceeded the FDIC limit. Specifically, as of December 31, 2024, the balances with FDIC member institutions exceeded insured amounts by approximately $1,119,000. As of December 31, 2023, the excess was approximately $945,000.
This information is relevant to potential franchisees as it provides insight into how Beard Papas manages its cash assets and the extent to which those assets are protected by FDIC insurance. While the FDD does not explicitly define "cash equivalents", it does state that they are held in accounts alongside cash. A prospective franchisee may want to ask Beard Papas for a more precise definition of what instruments are considered cash equivalents for financial reporting purposes.