What are the two components of cash and cash equivalents for Beauty Bungalows?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD 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.
The Company maintains its cash in bank deposit accounts which could exceed federally insured limits. 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. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, cash and cash equivalents consist of two components. These 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.
For a prospective franchisee, understanding the composition of cash and cash equivalents is crucial for assessing the financial health and liquidity of Beauty Bungalows. Knowing that these assets include cash balances and short-term investments provides insight into the company's ability to meet its short-term obligations and manage its working capital.
The disclosure also indicates that Beauty Bungalows maintains its cash in bank deposit accounts, which could exceed federally insured limits. However, the company states it has not experienced any losses in such accounts and believes it is not exposed to significant credit risk related to its cash and cash equivalents. This suggests that Beauty Bungalows management is aware of and actively manages the risks associated with holding cash in potentially uninsured accounts.