What are considered cash equivalents for Sonesta Simply Suites?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. At times, cash balances at banks and other financial institutions may be in excess of federal insurance limits.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, cash equivalents are defined as highly liquid investments purchased with an original maturity of three months or less. This is a standard accounting practice.
For a prospective Sonesta Simply Suites franchisee, understanding this definition is important for interpreting the financial statements provided in the FDD. It clarifies what assets the company considers nearly as liquid as cash when assessing its financial health.
It's also noted that cash balances at banks and other financial institutions may, at times, exceed federal insurance limits. This is a common situation for businesses that handle significant amounts of cash, and it highlights the importance of Sonesta Simply Suites managing its cash deposits across multiple institutions or utilizing other strategies to mitigate the risk of loss above the insured amounts.