What are examples of Level 2 inputs for Bombs Away's financial instruments?

According to Bombs Away's 2024 Franchise Disclosure Document, Level 2 inputs are used in determining the fair value of financial instruments. These inputs are observable, either directly or indirectly, but are not quoted prices in active markets for identical assets or liabilities (which would be Level 1). Examples of Level 2 inputs include quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active.

In simpler terms, Level 2 inputs are used when the exact item isn't actively traded, but there's enough similar market data to make a reasonable valuation. This could involve looking at comparable Bombs Away franchises that have recently sold, or using industry benchmarks to estimate the value of certain assets.

Understanding these levels is important for prospective Bombs Away franchisees because it provides insight into how the company values its assets and liabilities. While the document states that the carrying amounts of the company's financial assets and liabilities approximate their fair value as of December 31, 2023, knowing the valuation techniques helps in assessing the overall financial health and stability of the franchise.