On what accounting basis are Christian Brothers Automotive's consolidated financial statements prepared?

According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, the company prepares its consolidated financial statements on the accrual basis of accounting, following accounting principles generally accepted in the United States of America (GAAP). This means that revenues are recognized when earned and expenses are recognized when incurred, regardless of when cash changes hands.

The accrual basis of accounting provides a more accurate picture of a company's financial performance over time compared to the cash basis, which only recognizes revenues and expenses when cash is received or paid. GAAP ensures that financial statements are presented in a consistent and comparable manner, allowing potential franchisees and other stakeholders to make informed decisions.

For a prospective Christian Brothers Automotive franchisee, this indicates that the financial data presented in the FDD is prepared using a standard and reliable accounting method. Understanding this basis is crucial for interpreting the financial statements and assessing the financial health and performance of Christian Brothers Automotive. Franchisees should consult with a financial advisor to fully understand the implications of accrual-based accounting for their investment.