Search results
Jun 27, 2024 · Liquid assets are often viewed as cash, and likewise may be called cash equivalents because the owner is confident the assets can easily be exchanged for cash at any time.
May 31, 2024 · Cash and cash equivalents help companies with their working capital needs since these liquid assets are used to pay off current liabilities, which are short-term debts and bills. Cash is money...
Oct 14, 2024 · A cash equivalent is an investment with a short-term maturity such as stocks, bonds, and mutual funds that can be quickly converted to cash. Liquid assets differ from non-liquid assets such...
- Steven Nickolas
- 2 min
/ Cash and cash equivalents (CCE) Josh Krissansen, Contributor. So you’ve been digging into your company’s latest balance sheet, and there’s something you see listed under current assets that you’re not super sure about: Cash and cash equivalents. Cash seems pretty self-explanatory, but what about cash equivalents? What’s the difference?
- Cash. Includes physical money (local and foreign currency) as well as the savings account and/or current account balances.
- Cash equivalents. Cash equivalents are investment securities with a maturity period not exceeding a year. Examples include treasury bills, treasury bonds, certificates of deposit, and money market funds.
- Marketable securities. Stocks, bonds, and exchange traded funds (ETFs) are examples of marketable securities with a high degree of liquidity. They can be sold easily and it usually takes just a few days to receive the cash from their sale.
- Accounts receivable. Money owed to a business by its customers for goods and services provided makes up accounts receivable. The liquidity of accounts receivable varies.
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.
People also ask
What are examples of liquid assets?
What is the difference between liquid assets and cash equivalents?
What is the difference between liquid and illiquid assets?
What is a cash equivalent asset?
What is liquid assets to net worth ratio?
What types of assets have different liquidity conversion timeframes?
Oct 6, 2024 · What is the difference between cash equivalents and liquid assets? Cash equivalents are a subset of liquid assets. While all cash equivalents are liquid, not all liquid assets qualify as cash equivalents.