Cash
From MarketsWiki
Cash and cash equivalents like bank deposits and cash funds are thought to be the safest of investment asset classes, although recent financial events have shaken even that long-held belief. Despite that, cash has grown in popularity recently and should keep expanding as the credit crisis continues.
Flush
Cash's best known forms are paper currency and its immediate equivalents: bank checking and savings accounts. Other 'cash equivalents', defined as short-term, low-interest, low-risk assets, include certificates of deposits or CDs (also called time deposits), short-term U.S. Treasury Bills (T-bills) and money market funds (also called cash funds) or accounts.[1]
According to one authority[2], cash investments are characterized as on-call - though not necessarily in an on-call account - and should be without entry or exit fees or withdrawal penalties. They also usually offer lower rates of return than fixed-interest funds, although LIBOR rates for overnight interbank cash more than doubled over September, 2008 to 6.875%.[3]
The OCF
The expression "cash is king" derives not from its traditional role as an investment safe harbor in troubled times but from the relative importance of a healthy cash flow in determining a corporation's financial health.[4] Operating cash flow (OCF) is considered a better indicator of corporate fitness than net income because companies, due to accrual accounting rules, can report positive net income while suffering negative OCF.
Latest news
Cash investments made a big comeback globally in late 2007, a time of increased financial uncertainty and market volatility, with money-market funds rising to become the dominant asset class in the UK.[5] Funds began flowing from equities to cash funds in Q4 2007 and by year-end, UK money-market funds accounting for 39% of total assets invested.
References
- ↑ Asset class: Cash and cash equivalents. WealthAccumulator. Retrieved on September 30, 2008.
- ↑ Cash and fixed-interest investment asset class. The Shape of Money. Retrieved on September 30, 2008.
- ↑ Overnight-Lending Markets Still Flashing Red. Wall Street Journal blogs. Retrieved on October 1, 2008.
- ↑ For Stocks, Happiness is a Positive Cash Flow. About.com. Retrieved on September 30, 2008.
- ↑ Cash funds are the dominant asset class in 2007. MoneyMarketing.com. Retrieved on September 30, 2008.
