Difference between revisions of "Cash"

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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.<ref>{{cite web|url=http://stocks.about.com/od/evaluatingstocks/a/Cashking122704.htm|name=For Stocks, Happiness is a Positive Cash Flow|org=About.com|date=September 30, 2008}}</ref> 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.
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.<ref>{{cite web|url=http://stocks.about.com/od/evaluatingstocks/a/Cashking122704.htm|name=For Stocks, Happiness is a Positive Cash Flow|org=About.com|date=September 30, 2008}}</ref> 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.<ref>{{cite web|url=https://secure.moneymarketing.co.uk/cgi-bin/item.cgi?id=158323&d=pnd2&h=pndh2&f=pndf2|name=Cash funds are the dominant asset class in 2007|org=MoneyMarketing.com|date=September 30, 2008}}</ref> 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.
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.<ref>{{cite web|url=https://secure.moneymarketing.co.uk/cgi-bin/item.cgi?id=158323&d=pnd2&h=pndh2&f=pndf2|name=Cash funds are the dominant asset class in 2007|org=MoneyMarketing.com|date=September 30, 2008}}</ref> 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.

Latest revision as of 15:15, 27 January 2014


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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.

References[edit]