what are cash equivalents 
cash equivalents are securities that are meant for short term investing normally they have solid credit quality and are highly liquid true to their name they are considered equivalent to cash because they can be converted to actual cash quickly the phrase cash and cash equivalents is found on balance sheets in the current assets section cash equivalents are one of three main asset classes in investing the other two are stocks and bonds cash equivalent securities have a low risk low return profile investopedia jessica olahunderstanding cash equivalentscash equivalents include u s government treasury bills bank certificates of deposit bankers acceptances corporate commercial paper and other money market instruments these financial instruments often have short maturities highly liquid markets and low risk cash equivalents are an important indicator of a company s financial well being analysts can estimate the advisability of an investment in a particular company by the company s ability to access cash and convert cash equivalents quickly such liquidity reflects a company that is able to pay its bills companies with large amounts of cash and cash equivalents can be primary targets of bigger companies with acquisition plans 