What does 'other adjustments' primarily consist of for Budget's allowance for doubtful accounts and tax valuation allowance?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
ed average interest rate of 8.01%. These notes were issued under previously outstanding series of debt.
In February 2025, we borrowed $500 million under a floating rate term loan due December 2025, which is part of our senior revolving credit facilities.
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Schedule II – Valuation and Qualifying Accounts
| (in millions) Description | Balance of | at Beginning Period | Expe | nse (Benefit) | Other Adjustments (a) | _ | Deductions | Balance at End of Period |
|---|---|---|---|---|---|---|---|---|
| Allowance for Doubtful Accounts: Year Ended December 31, 2024 2023 2022 | 87 | $ | 87 | $ (3) |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the "other adjustments" primarily consist of currency translation adjustments for both the allowance for doubtful accounts and the tax valuation allowance. This is detailed in the notes accompanying the financial statements.
For a prospective Budget franchisee, this means that fluctuations in currency exchange rates can impact the reported values of these accounts. The allowance for doubtful accounts is a contra-asset account that reduces the total amount of accounts receivable to the amount expected to be collected. The tax valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Both of these accounts are subject to currency translation adjustments.
Currency translation adjustments arise when Budget consolidates financial statements from subsidiaries operating in different countries and currencies. These adjustments do not necessarily reflect the underlying performance of the business but rather the impact of currency fluctuations on the reported financial results. Franchisees should be aware of how these adjustments can affect Budget's financial statements and potentially influence decisions related to financial performance and stability.