According to Benihana's FDD, what constitutes cash and cash equivalents?

According to Benihana's 2024 Franchise Disclosure Document, cash and cash equivalents are defined as cash on hand and highly liquid instruments that have original maturities of three months or less when purchased. For Benihana, these include cash in banks and cash held at the restaurants. The FDD specifies that this definition applies as of December 31, 2023, and 2022.

This definition is important for prospective franchisees because it clarifies how Benihana values its assets. Understanding the composition of cash and cash equivalents can help franchisees assess the company's financial health and stability. It also provides a benchmark for franchisees to manage their own cash flow, ensuring they maintain sufficient liquid assets for operational needs.

It is fairly standard practice for franchise FDDs to define cash and cash equivalents in this manner. The three-month maturity guideline is a common accounting principle for determining which short-term investments are liquid enough to be considered equivalent to cash. Franchisees should be aware of this definition as they review Benihana's financial statements and compare them to other franchise opportunities.