What does Southern Steer consider to be cash equivalents for the purpose of the statement of cash flows?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
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Cash and Cash Equivalents
The Company considers bank money market funds and certificates of deposit to be equivalent to cash, being readily convertible into cash. The Company does not routinely maintain balances in excess of insured limits. The Federal Deposit Insurance Corporation ("FDIC") insures funds up to $250,000 per depository institution, per deposit product. As of September 30, 2022,
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the company considers certain financial instruments to be equivalent to cash when preparing its statement of cash flows. Specifically, Southern Steer includes bank money market funds and certificates of deposit as cash equivalents, provided they can be readily converted into cash.
This accounting practice is important for prospective franchisees to understand because it affects how Southern Steer reports its cash position in its financial statements. By including these items as cash equivalents, Southern Steer provides a more comprehensive view of its liquid assets, which are assets that can be quickly converted into cash.
It is also noted that Southern Steer does not routinely maintain balances in excess of insured limits. The Federal Deposit Insurance Corporation (FDIC) insures funds up to $250,000 per depository institution, per deposit product. As of September 30, 2022, the Company did hold cash and cash equivalents in excess of FDIC limits. This means that while the company generally keeps its cash balances within insured limits for safety, there have been times when the company's cash holdings exceeded those limits.