According to Checkersrallys, what is Level 1 of the valuation hierarchy based upon?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
The three levels of the valuation hierarchy are based upon the transparency of inputs to the valuation of an asset or liability on the measurement date that are defined as follows:
- Level 1 Quoted prices (unadjusted) for an identical asset or liability in an active market.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys' 2025 Franchise Disclosure Document, the company uses a three-level valuation hierarchy to determine the fair value of its assets and liabilities. This hierarchy is based on the transparency of the inputs used for valuation on the measurement date.
Level 1 of this hierarchy specifically relies on quoted prices, without any adjustments, for identical assets or liabilities actively traded in the market. This means that if there's an active market where the exact same asset or liability is being bought and sold, Checkersrallys will use those prices directly to determine its fair value.
For a prospective franchisee, understanding this valuation hierarchy is important because it provides insight into how Checkersrallys assesses the value of its assets and liabilities, which can impact the company's financial statements and overall financial health. Knowing that Level 1 valuations are based on readily available market prices suggests a high degree of reliability and objectivity in those specific valuations.