What does Southern Steer consider to be equivalent to cash?
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 for accounting purposes. Specifically, Southern Steer includes bank money market funds and certificates of deposit in this category, provided they can be readily converted into cash. This is a standard accounting practice, as these types of investments are highly liquid and can be quickly accessed if needed.
Southern Steer also notes that it 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. However, as of September 30, 2022, Southern Steer did hold cash and cash equivalents in excess of FDIC limits.
For a prospective franchisee, this information is relevant for understanding how Southern Steer manages its finances and defines its liquid assets. Knowing what Southern Steer considers to be cash equivalents can provide insight into the company's financial reporting and risk management practices. It's worth noting that while Southern Steer aims to stay within FDIC insured limits, there have been times when their cash holdings exceeded this amount, which could expose the company to some risk if a financial institution were to fail.