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Cash and cash equivalents are readily accessible, low-risk assets. They may or may not be interest bearing. The best known forms of cash 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[edit]

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.

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.