According to Itan, what financial instruments are considered cash equivalents?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ies - The Company follows the alternative accounting standard for private companies with respect to entities under common control. As such, entities under common control have not been evaluated under the guidance in the variable interest subsections of the Financial Accounting Standards Board ("FASB") ASC 810.
Fair value measurements - The Company follows accounting standards consistent with the FASB codification which defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements for all fi
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the company considers financial instruments with a fixed maturity date of less than three months to be cash equivalents. Itan holds its cash deposits at a regional bank. The Federal Deposit Insurance Corporation (FDIC) insures the balance in the account up to $250,000 per bank as of December 31, 2024 and 2023.
It is important for prospective franchisees to understand how Itan defines cash equivalents, as this definition impacts the company's financial statements and overall financial health. Knowing that Itan considers instruments with maturities under three months as cash equivalents provides insight into their short-term liquidity management.
The FDD also indicates that Itan had $0 and $104,387 that were in excess of the FDIC limit as of December 31, 2024 and 2023, respectively. This suggests that while most of Itan's cash is insured, a portion may not be, which could pose a risk, although management believes that the Company is not exposed to any significant credit risk with respect to its cash.
Understanding these accounting policies is crucial for potential franchisees to assess the financial stability and risk profile of Itan before investing in a franchise. It is fairly typical accounting practice to define cash equivalents as instruments with very short-term maturities (typically under 3 months).