Company: CAVA
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001639438-25-000007
Chunk: 16

Company: CAVA GROUP, INC.
Filing Date: 2025-08-13
Form: 10-Q
Item: Item 1
Chunk 16
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Total$95,629 $95,611 

4.    FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement accounting guidance creates a fair value hierarchy to prioritize the inputs used to measure value into three categories. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement, where Level 1 is the highest category and Level 3 is the lowest category. The three levels are defined as follows: •Level 1—Quoted prices for identical instruments in active markets.•Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant value drivers are observable. •Level 3—Unobservable inputs for the asset or liability. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. Due to their short-term nature, the carrying value of the Company’s cash and cash equivalents, including money market securities, accounts receivable, and accounts payable approximates fair value. Assets and Liabilities Measured at Fair Value on a Recurring BasisFixed income debt securitiesThe fair values of fixed income debt securities were based on the market values obtained from an independent asset management service. The asset management service utilizes the market approach in determining the fair values of the investments held by the Company. Typical inputs and assumptions to pricing models used to value the Company’s investments in fixed income debt securities include, but are not limited to, benchmark yields, reported trades, broker-dealer quotes, credit spreads, credit ratings, bond insurance (if applicable), benchmark securities, bids, offers, reference data, and industry and economic events. For asset backed securities, inputs and assumptions may also include the structure of issuance, characteristics of the issuer, collateral attributes, and prepayment speeds.Note ReceivableThe Company has elected to account for the Note Receivable described in Note 3 (Investments) under the fair value option. As a result, the embedded conversion feature, which would otherwise require bifurcation, is not accounted for separately. The fair value of the Note Receivable is determined under a market approach utilizing Level 3 inputs such as estimates of the equity value of the underlying business, volatility, and a probability-weighted expected time to exit.

9

The fair value of the Company’s