Chapter 8, Problem 3E

To determine

Liquid Assets, Cash Equivalents and Cash Management:

Liquidity is basically company assets which can easily be converted to cash within a short period of time which is ideally 3 months. Examples are stock, accounts receivables, short term liquid investments etc.

Cash equivalents are assets which can be converted to cash; these include Treasury Bills and other money market instruments.

Cash management consists of forecasting inflows and outflows, and maintaining an ideal cash balance as required.

To determine:

The terms Liquid Assets and Cash Equivalent and explain the principles of good cash management.