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May 31, 2024 · Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company's assets that are cash or can be converted into cash immediately.
Cash is the most basic form of liquid asset because it is universally accepted for the exchange of goods and services. Cash equivalents, on the other hand, are short-term investments that can be quickly and easily converted into cash.
For an asset to be considered a cash equivalent, it must meet two key criteria: Highly liquid. The asset must be able to be converted very easily into cash. Short maturity period. The asset typically matures in three months or less. Assets like treasury bills, commercial paper, and some Certificates of Deposits (CDs) are considered cash ...
Jul 31, 2023 · Cash equivalents are part of the company's net working capital (current assets minus current liabilities), which it uses to pay invoices for operating expenses, buy inventory, cover...
Cash equivalents are short-term, highly liquid assets that can readily be converted into known amounts of cash and with little risk of price fluctuations.
Aug 22, 2023 · Cash equivalents are short-term, highly liquid assets that can readily be converted into known amounts of cash and with little risk of price fluctuations. An example of a short-term cash equivalent asset would be one that matures in three months or less from the acquisition date.
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Cash equivalents are the total worth of cash on hand that includes similar goods to cash; cash and cash equivalents must be in the current assets section on the balance sheet. Because cash and cash equivalents are the most liquid assets, they are always listed on the top line of a company's balance sheet.
