What was the balance of the tax valuation allowance for Budget at the beginning of the period in 2023?
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 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the balance of the tax valuation allowance at the beginning of the period in 2023 was $103 million. This figure represents Budget's assessment of the portion of deferred tax assets that may not be realized in the future.
A tax valuation allowance is a contra-asset account used to reduce the carrying value of deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. This can occur due to various factors, such as a history of losses or expectations of future losses. The allowance reflects a degree of uncertainty regarding the company's ability to generate future taxable income to utilize these deferred tax assets.
For a prospective Budget franchisee, this information provides insight into the company's financial health and its expectations regarding future profitability. While a large valuation allowance isn't necessarily a negative indicator, it suggests that Budget has considered the possibility that some of its deferred tax assets may not be fully utilized. Franchisees may want to inquire about the specific factors contributing to the valuation allowance and Budget's strategies for improving its profitability and tax position.