For Hck Hot Chicken's statement of cash flows, what does the company consider to be cash equivalents?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
any uses the accrual basis of accounting in accordance with generally accepted accounting principles.
Cash and cash equivalents
For the purpose of the statement of cash flows, the Company considers all short-term debt securities purchased with an original maturity of three months or less and all cash balances or deficits to be cash equivalents. Accounts at each institution are insured by the Federal Deposit Corporation (FDIC) up to $250,000. From time to time, balances m
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, the company defines cash equivalents for the purpose of the statement of cash flows as short-term debt securities purchased with an original maturity of three months or less. Additionally, all cash balances or deficits are considered cash equivalents by Hck Hot Chicken.
This definition is important for prospective franchisees as it provides insight into how Hck Hot Chicken manages and reports its cash flow. Understanding what the company considers to be cash equivalents can help franchisees better interpret the financial statements provided in the FDD and assess the financial health of the franchisor.
It's also noted that accounts at each institution are insured by the Federal Deposit Corporation (FDIC) up to $250,000. Balances maintained may exceed the maximum amount insured by the FDIC, but management does not believe there is a risk of loss with these accounts.