How does Benjamin Franklin Plumbing determine the cost of its inventory?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
nd $1,025 and had write-offs of uncollectible accounts of $166, $175, and $403, respectively.
Cash and Cash Equivalents
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 whic
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 values its inventory at the lower of cost or net realizable value. Cost is determined using a weighted-average method or a first-in, first-out (FIFO) method.
Benjamin Franklin Plumbing assesses its inventory annually for slow-moving and obsolete items. As of December 31, 2024, the company had an inventory reserve of $439, and as of December 31, 2023, the reserve was $379.
This valuation method is a standard accounting practice. Franchisees should understand these accounting principles to manage their inventory effectively and interpret their financial statements accurately. The inventory reserve indicates that Benjamin Franklin Plumbing acknowledges potential losses from obsolete or slow-moving inventory, which is a common and prudent accounting practice.