Cash equivalent

Cash equivalent
A short-term security that is sufficiently liquid that it may be considered the financial equivalent of cash. The New York Times Financial Glossary

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cash equivalent cash equivalent ➔ equivalent

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   An asset that is so easily and quickly convertible to cash that holding it is equivalent to holding cash. A Treasury bill is considered cash equivalent. This term is also used to describe an alternative method of liquidating a position, whereby the seller provides the cash equivalent to the buyer rather than the security itself. Settling by cash equivalent is a much simpler process than providing the underlying bonds or shares. It is usually done when the counter party to a deal has no interest in owning the underlying securities but wishes to protect himself against interest rate or market moves.
   ► See also Cash.

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cash equivalent UK US noun [C]
► MONEY an amount of money that has the same value as something: »

The insurance policy states that the insurer will endeavour to replace your lost or damaged goods rather than offer a cash equivalent.

► [often plural] ACCOUNTING, FINANCE money in a company's bank accounts and other assets that can easily be changed into money: »

The company believes that its existing cash and cash equivalents are sufficient to meet their cash requirements during the next twelve months.


Financial and business terms. 2012.

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