Cash-like

Cash-like refers to assets or instruments that can be readily converted into cash with minimal risk of loss of value and are highly liquid. They possess characteristics similar to actual cash, providing immediate access to funds. These assets are typically short-term, low-risk investments held to meet immediate liquidity needs and are crucial for financial stability. Their primary function is to serve as a readily available store of value and a means for settling transactions, mirroring cash's fundamental attributes. Unlike cash, cash-like assets might earn a small amount of interest.

Cash-like meaning with examples

• A company might consider highly rated money market accounts as cash-like assets to pay their bills easily. They are safer than stocks or bonds. Businesses and financial institutions often keep cash-like assets. They are essential for covering payroll. They also cover short-term operational expenses when income isn't consistent.
• A savvy investor could use short-term government securities. These function as cash-like investments. They have very little risk. They have a quick turnaround to meet immediate cash needs. They can quickly sell without any significant losses. These are used for times of need to maintain financial flexibility.
• When managing personal finances, a high-yield savings account is very useful. It can be considered cash-like because it offers quick access to funds. It's a secure place to keep funds for emergencies. It's a smart choice versus stocks. The individual has access to immediate capital when required.
• Many corporations consider certificates of deposit (CDs) as cash-like if the term is short. This depends on how liquid a corporation needs to be. The cash-like status means the corporation can get its capital with little risk. It's a low-risk asset. The company can also use its cash to generate income.