Cash and cash equivalents
Cash and cash equivalents
Why not just cash?
Cash is liquid asset and is the monetary means of most transaction but in accounting we need to make the most relevant information available to the user of the Financial statement. This is why we use the more liberal phrase "cash and cash equivalents" is used. Cash equivalents include treasury bills and commercial paper and money market funds all of which are highly liquid and are under a 3 month maturity date. Having a low amount of cash and cash equivalents is not a bad thing since it means that the company is finding ways to spend it resources productively. That being said comparing with the industry average may paint a better picture on the liquidity of company.
Example Amazon is a company with very little cash on hand compared to valuation as a company this is understood to be a good thing since it is consistently investing in the future and investing in new projects. While Apple is seen as a company with to much cash on it books they are forced to keep the money overseas in Ireland to avoid paying large amount of U.S. taxes.