What does Beauty Bungalows include in its definition of 'cash and cash equivalents'?

According to Beauty Bungalows' 2025 Franchise Disclosure Document, cash and cash equivalents include all cash balances on deposit with financial institutions and highly liquid investments with a maturity of three months or less at the date of acquisition. This definition is important for prospective franchisees as it clarifies how Beauty Bungalows manages and reports its liquid assets. Understanding this definition helps franchisees interpret the company's financial statements accurately.

Beauty Bungalows maintains its cash in bank deposit accounts, which could exceed federally insured limits. However, the company has not experienced an instance where cash held in the account exceeded insured limits since its inception and has not had losses in such accounts. This indicates that Beauty Bungalows takes steps to manage its cash deposits to mitigate risk, even though balances may surpass the standard FDIC insurance coverage of $250,000 per depositor, per insured bank.

For a prospective franchisee, this information provides insight into Beauty Bungalows' financial management practices. Knowing that the company considers investments with a maturity of three months or less as cash equivalents is essential for assessing the company's short-term financial health. Additionally, the company believes it is not exposed to any significant credit risk on cash and cash equivalents.