Cash equivalents

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1. Financial reporting - balance sheet - assets.

For financial reporting purposes, cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Examples of cash equivalents for financial reporting purposes include money market instruments, treasury bills, short-term government bonds, marketable securities and commercial paper.

Cash equivalents generally mature within three months compared to short-term investments that mature in 12 months and long-term investments that mature in over 12 months.

2. Liquidity management.

Outside the financial reporting context, the term 'cash equivalents' is also used more loosely, and may include fewer, or more, assets than those defined strictly above.

See also