Exclusive Content:

Short term investments of balance sheet

Short-term investments, also known as marketable securities or temporary investments, are investments that are expected to be converted into cash within one year or less. They are considered to be a type of current asset on a company’s balance sheet.

Short-term investments are typically made in highly liquid securities such as cash equivalents, money market instruments, and highly rated debt securities. They are made with the intention of earning a return on the investment while maintaining a low level of risk.

Short-term investments are often made to manage excess cash that a company has on hand and to ensure that the company has access to liquidity when it is needed. They are also made to take advantage of short-term market opportunities or to diversify the company’s investment portfolio.

Why marketable securities are important?

  1. Liquidity: Marketable securities are highly liquid, which means that they can be easily bought and sold on public markets. This allows companies to access cash quickly when it is needed.
  2. Risk management: Marketable securities are generally considered to be low-risk investments, as they are issued by highly creditworthy borrowers and are highly liquid. This makes them a good choice for companies looking to manage risk in their investment portfolios.
  3. Return on investment: While marketable securities may not offer the highest returns compared to other types of investments, they do offer a degree of stability and a predictable stream of income. This makes them a good choice for companies looking to generate a stable return on their investment.
  4. Diversification: Investing in marketable securities allows companies to diversify their investment portfolios and reduce their exposure to risk.

Some examples of marketable securities, also known as short-term investments:

Cash equivalents: Cash equivalents are highly liquid investments that are readily convertible into cash and have a short-term maturity. Examples of cash equivalents include treasury bills, commercial paper, and money market funds.

Money market instruments: Money market instruments are short-term, fixed-income securities with maturities of one year or less. Examples of money market instruments include certificates of deposit, banker’s acceptances, and repurchase agreements.

Highly rated debt securities: Highly rated debt securities are fixed-income securities that are issued by highly creditworthy borrowers. Examples of highly rated debt securities include government bonds, corporate bonds, and municipal bonds.

Stocks: Stocks, also known as equities, represent ownership in a company and entitle the holder to a share of the company’s profits. Stocks are considered to be marketable securities because they are easily bought and sold on public stock exchanges.

Latest

Mastering Operation Management Concepts: A Guide for MBA Students

Operation management is like a magical factory that takes raw materials (in this case, ideas) and turns them into fantastic products and services.

Social Exchange Theory: Building Connections Through Reciprocity

The Social Exchange Theory, which lies at the heart of our social interactions, is a beautiful reminder of the power of reciprocity and collaboration in our everyday lives.

Embracing Competitive Advantages in a Globalized Economy

In an increasingly globalized economy, organizations face a myriad of challenges in order to maintain their growth, sustainability, and profitability.

What are the differences between vision, mission and strategy?

Vision, mission, and strategy are three key elements of strategic management, but they have different meanings and functions

Newsletter

spot_img

Don't miss

Mastering Operation Management Concepts: A Guide for MBA Students

Operation management is like a magical factory that takes raw materials (in this case, ideas) and turns them into fantastic products and services.

Social Exchange Theory: Building Connections Through Reciprocity

The Social Exchange Theory, which lies at the heart of our social interactions, is a beautiful reminder of the power of reciprocity and collaboration in our everyday lives.

Embracing Competitive Advantages in a Globalized Economy

In an increasingly globalized economy, organizations face a myriad of challenges in order to maintain their growth, sustainability, and profitability.

What are the differences between vision, mission and strategy?

Vision, mission, and strategy are three key elements of strategic management, but they have different meanings and functions

What is VRIO Analysis? Key tool for Competitive Advantage

VRIO analysis is a framework used in strategic management to assess the resources and capabilities of a company and evaluate their potential for competitive advantage
spot_imgspot_img

Mastering Operation Management Concepts: A Guide for MBA Students

Operation management is like a magical factory that takes raw materials (in this case, ideas) and turns them into fantastic products and services.

Social Exchange Theory: Building Connections Through Reciprocity

The Social Exchange Theory, which lies at the heart of our social interactions, is a beautiful reminder of the power of reciprocity and collaboration in our everyday lives.

Embracing Competitive Advantages in a Globalized Economy

In an increasingly globalized economy, organizations face a myriad of challenges in order to maintain their growth, sustainability, and profitability.

LEAVE A REPLY

Please enter your comment!
Please enter your name here