Cash equivalent

Assets that can be quickly converted to cash. These include receivables, Treasury Bills, short-term commercial paper and short-term government and corporate bonds and notes.

Short-term, low-risk investments, such as US Treasury bills or short-term certificates of deposit (CDs), are considered cash equivalents.

The Financial Accounting Standards Board (FASB) defines cash equivalents as highly liquid securities with maturities of less than three months. Liquid securities typically are those that can be sold easily with little or no loss of value.