– Cash Management – Learning Objectives

Simply put, money is money you can access.

Businesses make money by selling their products and services. However, businesses also have a variety of additional sources they can tap into when they need cash, called cash equivalents.
These are safe, short-term liquid securities that can be converted into cash relatively quickly.
Cash equivalents are short-term investments that can be easily converted into a known amount of cash.

A business considers cash equivalents to be the same as cash at bank.
Some examples of cash equivalents are investments that mature in less than three months, money market funds, certificates of deposits (or CDs), short-term bonds, and commercial paper.