What does Chicken Guy consider to be cash equivalents?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company considers all highly liquid debt investments with an initial maturity of three months or less at the date of purchase to be cash equivalents. At December 29, 2024, December 31, 2023, and December 25, 2022, the Company did not have any cash equivalents.
Funds collateralizing certain surety bonds maintained by the Company are included in restricted cash on the accompanying balance sheets.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the company considers "all highly liquid debt investments with an initial maturity of three months or less at the date of purchase to be cash equivalents."
For a prospective franchisee, understanding how Chicken Guy defines cash equivalents is important for interpreting the company's financial statements. This definition helps clarify the types of assets Chicken Guy includes when reporting its cash position. It is worth noting that as of December 29, 2024, December 31, 2023, and December 25, 2022, Chicken Guy did not have any cash equivalents.
Furthermore, the FDD mentions that funds collateralizing certain surety bonds are classified as restricted cash. This distinction is crucial because restricted cash cannot be used for general operating purposes, which impacts the overall liquidity assessment of the company. Franchisees should pay attention to the levels of both cash and restricted cash to get a clear picture of Chicken Guy's financial health.