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Cash and cash equivalents (CCE) are the most liquid current assets found on a business's balance sheet. Cash equivalents are short-term commitments " with temporarily idle cash and easily convertible into a known cash amount". An investment normally counts to be a cash equivalent when it has a short maturity period of 90 days or even less from date of acquisition and when it carries an insignificant risk of changes in value. Equity investments mostly are excluded from cash equivalents, unless they are essentially cash eqivalents, for instance, if the preferred shares acquired within a short maturity period and with specified recovery date. One of the company's crucial health indicators is its ability to generate cash and cash equivalents. Company with a relatively higher net assets than cash and cash equivalents is mostly an indication of non-liquidity. For investors and companies cash and cash equivalents are generally counted to be "low risk and low return" investments and sometimes analysts can estimate company's ability to pay its bills in a short period of time by comparing CCE and current liabilities. Nevertheless, this can happen only if there are receivables that can be converted into cash immediately. However, companies with a big value of cash and cash equivalents are targets for taking over by other companies, since their excess cash helps buyers to finance their acquisition. High cash reserves can also indicate that the company is not effective at deploying its CCE resources, whereas for big companies it might be a sign of preparation for substantial purchases. The opportunity cost of saving up CCE is the return on equity that company could earn by investing in a new product or service or expansion of business. == Components of cash == * Currency * Coins * Bank overdrafts normally are considered as financining activities.Nevertheless, where bank borrowings which are repayable on a demand form an integral part of company's cash management, bank overdrafts are considered to be a part of cash and cash equivalents. * Cash in saving accounts is generally for the saving purposes so that they are not used for daily expenses. * Cash in checking accounts allow to write checks and use elctronic debit to access funds in the account. * Money order is a financial instrument issued by government or financial istitutions which is used by payee to receive cash on demand. The advantage of money orders over checks is that it is more trusted since it is always prepaid. They are acceptable for payment of personal or small business's debts and can be purchased for a small fee at many locations such as post office and grocery. * Petty cash small amount of cash that is used for payment of insignificant expenses and the amount of it may vary depending on the organization. For some entities $50 is adequate amount of cash, whereas for others the minimum sum should be $200. Petty cash funds must be safeguarded and recorded in order to avoid thefts. Often there is a custodian appointed who is responsible for the documentation of petty cash transactions. 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「cash and cash equivalents」の詳細全文を読む スポンサード リンク
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