What is identified as a significant estimate that Floors To Go management must make?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to, the franchisee cashback program accruals.
Source: Item 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to Floors To Go's 2025 Franchise Disclosure Document, a significant estimate that the company's management must make relates to the franchisee cashback program accruals. This is because the preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of income and expenses during the reporting year.
For a prospective Floors To Go franchisee, this means that the actual financial results of the cashback program could differ from the initial estimates made by the management. These estimates are used in the financial statements, which are used to make important business decisions.
It is important to note that these estimates are based on accounting principles generally accepted in the United States of America. While management does not believe the company is exposed to any significant interest rate or other financial risk as a result of these deposits, it is important for prospective franchisees to understand that actual results could differ from those estimates.