What does Benjamin Franklin Plumbing consider to be cash or cash equivalents?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company considers all cash and highly liquid investments purchased with an initial maturity of three months or less to be cash or cash equivalents. Cash consists primarily of cash on hand and cash on deposit. The Company maintains its cash in banks in which deposits may, from time to time, exceed federally insured limits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risks related to cash.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, the company defines cash and cash equivalents as all cash and highly liquid investments with an initial maturity of three months or less. This includes cash on hand and cash on deposit.
For a prospective franchisee, this definition is important for understanding Benjamin Franklin Plumbing's financial statements. It clarifies how the company categorizes its most liquid assets. Knowing this definition helps in assessing the company's short-term financial health and ability to meet its immediate obligations.
Benjamin Franklin Plumbing maintains its cash in banks, and these deposits may, at times, exceed federally insured limits. However, the company states that it has not experienced any losses in these accounts and believes it is not exposed to significant credit risks related to its cash management practices. This provides some reassurance regarding the safety of the company's cash holdings, although franchisees may want to inquire further about the specific banks used and the amounts held in excess of insured limits.