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Terms Beginning with C
       
       
 

Cash Equivalents

Financial Term


Cash equivalents are highly liquid assets that are easily convertible into cash. These assets are considered to be equivalent to cash because they have a very low risk of loss and can be readily converted into cash. Examples of cash equivalents include money market instruments, Treasury bills, commercial paper, and bank certificates of deposit.

Cash equivalents are used in the financial industry as a measure of a company's liquidity. Companies need to hold sufficient cash or cash equivalents to cover their short-term financial obligations, such as paying bills or meeting payroll. The amount of cash equivalents a company holds is also used as an indicator of the company's financial strength and stability.

Investors also look at a company's cash equivalents to assess its ability to weather economic downturns or unexpected financial hardships. A company with a large amount of cash equivalents is generally considered to be better positioned to stave off such challenges.

Cash equivalents are also used in financial analysis to calculate key ratios such as the current ratio and quick ratio. These ratios help investors and analysts understand a company's financial health and ability to meet short-term obligations.




   
     

Cash Equivalents

Financial Term


Cash equivalents are highly liquid assets that are easily convertible into cash. These assets are considered to be equivalent to cash because they have a very low risk of loss and can be readily converted into cash. Examples of cash equivalents include money market instruments, Treasury bills, commercial paper, and bank certificates of deposit.

Cash equivalents are used in the financial industry as a measure of a company's liquidity. Companies need to hold sufficient cash or cash equivalents to cover their short-term financial obligations, such as paying bills or meeting payroll. The amount of cash equivalents a company holds is also used as an indicator of the company's financial strength and stability.

Investors also look at a company's cash equivalents to assess its ability to weather economic downturns or unexpected financial hardships. A company with a large amount of cash equivalents is generally considered to be better positioned to stave off such challenges.

Cash equivalents are also used in financial analysis to calculate key ratios such as the current ratio and quick ratio. These ratios help investors and analysts understand a company's financial health and ability to meet short-term obligations.




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