(1) Summary of Significant accounting Policies (a) Principles of consolidation (b) use of estimates (c) Fair value Measurement (d) Fair value of Financial instruments (e) cash and cash equivalents (f)  accounts receivable (g) inventories UFp technologies, Inc. (“the Company”) is an innovative designer and custom converter of foams, plastics, composites and  natural fiber products principally serving the medical, automotive, consumer, electronics, industrial and aerospace and defense  markets. the Company was incorporated in the state of Delaware in 1993. the consolidated financial statements include the accounts and results of operations of UFp technologies, Inc., its wholly- owned subsidiaries, Moulded Fibre technology, Inc., simco Industries, Inc. and stephenson & Lawyer, Inc. and its wholly- owned subsidiary, patterson properties Corporation. All significant intercompany balances and transactions have been  eliminated in consolidation. the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the  United states of America requires management to make estimates and assumptions that affect the reported amounts of  assets and liabilities, including allowance for doubtful accounts and the net realizable value of inventory, and disclosure of  contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues  and expenses during the reporting period. Actual results could differ from those estimates. the Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an  orderly transaction between market participants at the measurement date. When determining the fair value measurements  for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most  advantageous market in which the Company would transact and the market-based risk measurement or assumptions that  market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk. the Company has not elected fair value accounting for any financial instruments for which fair value accounting is optional. Cash and cash equivalents, accounts receivable, accounts payable and accrued taxes and other liabilities are stated at  carrying amounts that approximate fair value because of the short maturity of those instruments. the carrying amount of  the Company’s long-term debt approximates fair value as the interest rate on the debt approximates the Company’s current  incremental borrowing rate. the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.  At December 31, 2014 and 2013, cash equivalents primarily consisted of money market accounts and certificates of deposit  that are readily convertible into cash. the Company maintains its cash in bank deposit accounts, money market funds, and certificates of deposit that at times  exceed federally insured limits. the Company periodically reviews the financial stability of institutions holding its accounts,  and does not believe it is exposed to any significant custodial credit risk on cash. the Company’s main operating account  with Bank of America exceeds federal depository insurance limit by approximately $23.2 million. the Company periodically reviews the collectability of its accounts receivable. provisions are recorded for accounts that  are potentially uncollectable. Determining adequate reserves for accounts receivable requires management’s judgment.  Conditions impacting the realizability of the Company’s receivables could cause actual asset write-offs to be materially  different than the reserved balances as of December 31, 2014. Inventories include material, labor, and manufacturing overhead and are valued at the lower of cost or market. Cost is  determined using the first-in, first-out (FIFO) method. the Company periodically reviews the realizability of its inventory for potential obsolescence. Determining the net  realizable value of inventory requires management’s judgment. Conditions impacting the realizability of the Company’s  inventory could cause actual asset write-offs to be materially different than the Company’s current estimates as of  December 31, 2014. 21 NoTES To CoNSolIdATEd FINANCIAl STATEMENTS