How does Budget classify cash inflows and outflows relating to the acquisition of assets and principal debt repayment within its vehicle programs?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
We present separately the financial data of our vehicle programs. These programs are distinct from our other activities since the assets under vehicle programs are generally funded through the issuance of we present separately the financial data or our vehicle programs. These programs are distinct from our other activities since the assets under vehicle programs are generated by these assets is used, in part, to repay the principal and interest associated with the debt, Cash inflows and outflows relating to the acquisition of such assets and the principal debt repayment or financing of such assets are classified as activities of our vehicle programs. We believe it is appropriate to segregate the financial data of our vehicle programs because, ultimately, the source of repayment of such debt is the realization of such assets.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the company presents the financial data of its vehicle programs separately from other activities. Budget classifies cash inflows and outflows related to the acquisition of assets and the principal debt repayment or financing of these assets as activities within its vehicle programs. This segregation is based on the understanding that the repayment of debt is ultimately derived from the realization of these assets.
For a prospective franchisee, this means that the financial performance of the vehicle fleet is tracked independently. This provides transparency into how the vehicle assets are performing and how they contribute to debt repayment. It also highlights the importance of managing vehicle assets effectively, as their realization directly impacts the ability to repay the associated debt.
Budget believes that segregating the financial data of its vehicle programs is appropriate because the source of repayment of the debt is the realization of the assets. This accounting practice offers a clearer picture of the financial dynamics within the vehicle programs, which are critical to Budget's overall financial health.