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Cash and equivalents

Bank balances plus investments so short-dated and safe that they are treated as cash, normally anything maturing within three months.

Cash is the one asset whose carrying value is not an estimate, which is why it anchors net-debt and most solvency tests. But not all of it is available: cash held in foreign subsidiaries may face tax on repatriation, and some is operationally required just to run the payroll cycle.

Watch the trend alongside operating-cash-flow. Cash that rises because the company drew on a revolver is a very different signal from cash that rises because customers paid.

Example: Northwind Tools reports $210M of cash and equivalents, of which $64M sits in its European subsidiary and roughly $40M is working balance the treasurer will not let fall below.

Related: marketable-securities, net-debt, operating-cash-flow, current-assets, cash-ratio

Educational only, not advice. Spotted an error? Post in Site Feedback.