What Is a Cash Cost?
Cash is the most liquid currency asset. It refers to the part of an enterprise that exists in the form of currency during the production and operation process. It is an important part of the company's current assets.
Cash cost
Right!
- Chinese name
- Cash cost
- Attributes
- Monetary assets
- Features
- An important part of corporate liquid assets
- Object
- cash
- Cash is the most liquid currency asset. It refers to the part of an enterprise that exists in the form of currency during the production and operation process. It is an important part of the company's current assets.
- Enterprises holding cash generally have the following four motivations: transaction motivation, precautionary motivation, speculation, and financing motivation. Because of this, the cash cost of the company is generally composed of four parts.
- 1 Opportunity cost
- An enterprise cannot simultaneously use the cash to invest in investment securities and give up investment income.
- 2 Management costs
- Expenses incurred by the enterprise in retaining cash and managing cash.
- 3 Conversion costs
- An enterprise pays for the purchase of securities with cash and the transfer of securities in exchange for cash is the transaction fee paid, that is, the cost of converting between cash and securities.
- 4 Shortage costs
- The losses to the enterprise, including direct and indirect losses, caused by insufficient cash holdings and not timely replenishment through the realization of marketable securities.