How does the Gokhale Method define cash equivalents for the statement of cash flows?

According to Gokhale Method's 2024 Franchise Disclosure Document, the company's accounting policies define cash equivalents for the statement of cash flows. Gokhale Method considers highly liquid investments with original maturities of three months or less to be cash equivalents. In addition to these investments, cash on hand is also classified as a cash equivalent.

This definition is important because it impacts how Gokhale Method reports its cash flow. By including short-term, highly liquid investments, the company provides a more comprehensive view of its immediately available funds. This is a fairly standard accounting practice, as most companies include similar instruments in their cash equivalents.

For a prospective franchisee, understanding this definition can help in analyzing Gokhale Method's financial statements. It provides clarity on what assets are considered highly liquid and readily available to meet short-term obligations. This can be a useful metric when assessing the financial health and stability of the franchise system.