What are cash assets?

Cash assets are any economic source that can be easily converted to cash. These assets often retain a high level of liquidity and can be used to ensure the financial capacity of the company or individual to perform everyday operation. Cash assets are normally classified as current assets for accounting purposes, but in the definition it differ slightly. The current assets are usually expected to be converted to cash within a single operating cycle, which is usually one year. However, cash assets are unique for current assets in general that it must generally be transformed into cash within three months or less. Any other financial investment or deposit that will ripen in three months or less is also qualified as a cash asset. Assets that may be financially charged but are not considered to be cash assets include assets, equipment and other investments with a maturity than three months. Intangible assets such as patents, protective knowsMky and copyrights are also not considered to be cash assets.

Companies are responsible for cash assets in an effort to help creditors, investors and other entities take decisions on the company. For example, a company that entered the creditors for capital funds on the market will be more likely to receive funding if the balance sheet reflects a higher ratio of cash assets than other applicants. A higher ratio of cash assets usually reflects a higher probability that the company will be able to pay the debt. Accounting of cash assets may also allow management to determine the effects of daily decisions on the company's cash flows because assets are reported in the balance sheet of the company.

Cash Asset can be calculated for individuals for the same reasons as the company, Though is usually calculated on a smaller scale. Accounting of assets isDnotlivce can be done to determine the probability of paying a loan he could apply. Assets can also be counted for personal reasons, such as an annual review of the financial portfolio. In some cases, these assets need to be reported for tax or debt purposes.

Individual cash assets may include its control and savings accounts, stock bonds and short -term deposits. The criteria for determining cash asset are usually the same as for companies: the asset must be easily converted to cash within three months. Regional laws and methods of calculating these assets may vary. Most often, this form of financial audit is performed by a professional who usually understands local laws and adopted methods.