Against cash
• See Against Actuals.

Book cash
• A firm's cash balance as reported in its financial statements. Also called ledger cash.

Break even cash inflow
• The minimum level of cash inflow necessary for a project to be acceptable (i.e., NPV>$0.)

• The ready currency to which all liquid assets can be reduced.
• The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government bonds and Banker's Acceptances. Cash equivalents on balance sheets include securities (e.g., notes) that mature within 90 days.
• Is a term used in several ways. Sometimes refers to immediate funds, the settlement payment on the trade date, instruments which display high degrees of liquidity and act as cash equivalents, or the spot market.

Cash account
• An account in which the customer is required by the SEC's Regulation T to pay in full for securities purchased not later than two days after the standard payment period set by the NASD's Uniform Practice Code. See also: Margin Account; Regulation T.

Cash accounting
• A method of accounting in which sales are recorded when the money is actually received, not when the services are delivered. Expenses are recognized when paid, not at the time they are incurred

Cash and carry
• Purchase of a security and simultaneous sale of a future, with the balance being financed with a loan or repo.
• The actual market price plus any carrying costs such as interest cost and storage costs. Typically used in futures and forwards to describe the fundamental value (or the warranted value) of the contract.

Cash and cash equivalents
• A section of a company's Balance Sheet reports the value of Cash and Cash Equivalents. These are assets that are cash or can be converted into cash immediately, such as bank accounts, marketable securities, and Treasury Bills.

Cash and equivalents
• The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government bonds and Banker's Acceptances. Cash equivalents on balance sheets include securities (e.g., notes) that mature within 90 days.

Cash basis
• Recognizes revenues and expenses only with respect to actual inflows and outflows of cash. The cash basis is the main focus of the finance discipline.

Cash bonuses
• Bonus money paid to management for achieving certain performance goals.

Cash budget
• A forecasted summary of a firm's expected cash inflows and cash outflows as well as its expected cash and loan balances.

Cash budget cash forecast
• A statement of the firm's planned inflows and outflows of cash that is used to estimate the timing and magnitude of projected cash surpluses and deficits.

Cash commodity
• The actual physical commodity, as distinguished from a futures contract.

Cash commodity or security
• The actual commodity or security as opposed to futures contracts for it.

Cash concentration
• The process used by the firm to bring lockbox and other deposits together into one bank, often called the concentration bank.

Cash conversion cycle
• Abbreviated CCC. The amount of time a firm's resources are tied up; calculated by subtracting the average payment period from the operating cycle.
• The length of time between a firm's purchase of inventory and the receipt of cash from accounts receivable.

Cash cow
• Is a security, investment or a project which generates or throws off lots of funds due to contacts or contracts. Sometimes, the basis for this asset is an excellent customer, a monopolistic market position, or special advantage afforded by patents, licenses, or other economic properties. This cash flow can be used for many purposes. Typically, this situation constitutes the fundamental franchise of a business.
• A company that pays out all earnings per share to stockholders as dividends. Or, a company or division of a company that generates a steady and significant amount of free cash flow.

Cash cycle
• In general, the time between cash disbursement and cash collection. In net working capital management, it can be thought of as the operating cycle less the accounts payable payment period.

Cash deficiency agreement
• An agreement to invest cash in a project to the extent required to cover any cash deficiency the project may experience.

Cash delivery
• The provision of some futures contracts that requires not delivery of underlying assets but settlement according to the cash value of the asset.

Cash disbursements
• All cash outlays by the firm during a given financial period. Includes any cash outflow including payments on accounts payable, wages and salaries, taxes, purchase of fixed assets. Amortization or depreciation is never as cash disbursement.

Cash discount
• A percentage deduction from the purchase price; available to the credit customer who pays its account within a specified period of time.
• An incentive offered to purchasers of a firm's product for payment within a specified time period, such as ten days.

Cash discount period
• The number of days after the beginning of the credit period during which the cash discount is available.

Cash dividend
• A dividend paid in cash to a company's shareholders. The amount is normally based on profitability and is taxable as income. A cash distribution may include capital gains and return of capital in addition to the dividend.
• Money paid to a corporation's stockholders, normally out of the corporation's current earnings or accumulated profits. All dividends must be declared by the board of directors. Dividends are taxable as income to the shareholders.

Cash equivalent
• A short-term security that is sufficiently liquid that it may be considered the financial equivalent of cash.

Cash equivalent items
• Temporary investments of currently excess cash in short-term, high-quality investment media such as treasury bills and Banker's Acceptances.

Cash equivalent security
• Is a term which has several meanings. It often refers to high grade instruments which are very liquid and have very little time to maturity. Among these are treasury bills, commercial paper, and bankers' acceptances. In a somewhat broader sense it can include money market shares and short-term municipal paper.

Cash flow
• In investments, it represents earnings before depreciation, amortization and non-cash charges. Sometimes called cash earnings. Cash flow from operations (called funds from operations) by real estate and other investment trusts is important because it indicates the ability to pay dividends.
• Net income for the accounting period adjusted for changes in certain assets, liabilities and depreciation
• Also known as Cash Flow Per Share. The amount of cash a company generates during a period, calculated by adding noncash charges -- such as depreciation -- to net income after taxes. Cash Flow per Share is calculated by dividing the Cash Flow by the number of outstanding shares, and is sometimes used in lieu of Earnings per Share in analyzing a company. Cash Flow can be used as an indication of a company's financial strength. A company pays dividends from this cash amount. Some analysts consider this figure more meaningful than net income because it is the actual amount of money generated by the company.

Cash flow after interest and taxes
• Net income plus depreciation.

Cash flow break even point
• The point below which the firm will need either to obtain additional financing or to liquidate some of its assets to meet its fixed costs.

Cash flow coverage ratio
• The number of times that financial obligations (for interest, principal payments, preferred stock dividends, and rental payments) are covered by earnings before interest, taxes, rental payments, and depreciation.

Cash flow from operations
• A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus non-cash expenses that were deducted in calculating net income.

Cash flow matching
• Also called dedicating a portfolio, this is an alternative to multi period immunization in which the manager matches the maturity of each element in the liability stream, working backward from the last liability to assure all required cash flows.

Cash flow pattern
• An initial outflow followed by a series of inflows. This is typical of the cash flows found in a bond and in a capital project.

Cash flow per common share
• Cash flow from operations minus preferred stock dividends, divided by the number of common shares outstanding.

Cash flow per share
• See Cash Flow.

Cash flow statement
• A summary of cash inflows and cash outflows during an accounting period

Cash flow time line
• Line depicting the operating activities and cash flows for a firm over a particular period.

Cash grants
• One form of government incentive used to encourage corporate capital expenditures involving direct cash payments by any level of government to the company.

Cash management bill
• Very short maturity bills that the Treasury occasionally sells because its cash balances are down and it needs money for a few days.
• Very-short-maturity bills that the Treasury occasionally sells because its cash balances are down and it needs money for a few days.

Cash market
• Traditionally, this term has been used to denote the market in which commodities were traded, for immediate delivery, against cash. Since the inception of futures markets for T bills and other debt securities, a distinction has been made between the cash markets in which these securities trade for immediate delivery and the futures markets in which they trade for future delivery.
• Also called spot markets, these are markets that involve the immediate delivery of a security or instrument. Related: derivative markets.

Cash offer
• A public equity issue that is sold to all interested investors.

Cash on delivery or c.o.d. cod transaction
• Occurs when the buyer of securities pays for them when the actual delivery is made at the buyer's bank. This transaction is also known as a DVP or Delivery versus Payment. Regulation T states other conditions for DVPs.

Cash price
• Price quotation in the cash market (for immediate delivery).

Cash ratio
• The proportion of a firm's assets held as cash.

Cash receipts
• All items from which the firm receives cash inflows during a given financial period. Includes cash sales, collections on accounts receivable, net proceeds on the sale of assets, as well as interest and/or dividend income.

Cash refund annuity
• A type of refund annuity under which the refund is paid in a lump sum. See refund annuity and installment refund annuity.

Cash sale or cash transaction
• Is a transaction which calls for cash payment, delivering and settlement on the same day as the trade. This compares to a Regular Way transaction which are traded on one day and settled on a different day in accordance with industry standards or special terms. These trades are sometimes made to receive a dividend, to be entitled to a rights offering, or to be a shareholder on a record date in order to vote. It should be noted that the settlement process has been shrinking in order to reduce the risk associated with an open trade and its still to be made settlement.

Cash settlement
• Is the practice of making a final cash payment or adjustment for an open position. This process differs from early or traditional futures markets that required either a futures contract offset or the delivery of a physical commodity. The cash settlement process recognizes the insurability factor of risk management products. This trend towards cash settlements reduces instability due to squeezes, weather, or other disruptive variables.
• In the money market, a transaction is said to be made for cash settlement if the securities purchased are delivered against payment in Fed funds on the same day the trade is made.

Cash settlement contracts
• Futures contracts, such as stock index futures, that settles for cash, not involving the delivery of the underlying.

Cash surrender value
• An amount the insurance company will pay if the policyholder ends a whole life insurance policy.

Cash transaction
• A transaction where exchange is immediate, as contrasted to a forward contract, which calls for future delivery of an asset at an agreed-upon price.

Cash withdrawal
• The act of withdrawing some or all of an accumulation from an insurance contract or a deferred annuity.

• Refers to a situation where a firm runs out of cash and cannot readily sell marketable securities.

Conventional cash flow pattern
• An initial outflow followed by a series of inflows.

Cost of giving up a cash discount
• The implied rate of interest paid to delay payment of an account payable for an additional number of days.

Discounted cash flow
• Abbreviated DCF. Future cash flows multiplied by discount factors to obtain present values.

Discounting cash flows
• The process of finding present values; the inverse of compounding interest.

Discretionary cash flow
• Cash flow that is available after the funding of all positive NPV capital investment projects; it is available for paying cash dividends, repurchasing common stock, retiring debt, and so on.

Ending cash
• The sum of the firm's beginning cash and its net cash flow for the period.

Equivalent annual cash flow
• Annuity with the same net present value as the company's proposed investment.

Excess cash balance
• The (excess) amount available for investment by the firm if the period's ending cash is greater than the desired minimum cash balance; assumed to be invested in marketable securities.

Expected future cash flows
• Projected future cash flows associated with an asset of decision.

Free cash flow per share
• Net income plus all non-cash expenses, minus dividends and capital expenditures, on a per share basis. A measure of a firm's financial flexibility.

Free cash flows
• Cash not required for operations or for reinvestment. Often defined as earnings before interest (often obtained from operating income line on the income statement) less capital expenditures less the change in working capital.

General cash offer
• A public offering made to investors at large.

Incremental cash flows
• The additional cash flows--outflows or inflows--that are expected to result from a proposed capital expenditure.
• Difference between the firm's cash flows with and without a project.

Intermediate cash inflows
• Cash inflows received before the termination of a project.

Ledger cash
• A firm's cash balance as reported in its financial statements. Also called book cash.

Near cash
• Marketable securities, which are viewed the same as cash because of their high liquidity.

Net cash balance
• Beginning cash balance plus cash receipts minus cash disbursements.

Net cash flow
• The mathematical difference between the firm's cash receipts and its cash disbursements in each period.

Nominal cash flow
• A cash flow expressed in nominal terms if the actual dollars to be received or paid out are given.

Non cash expense
• Expenses deducted from sales on the income statement that do not involve an actual outlay of cash during the period.

Noncash charge
• A cost, such as depreciation, depletion, and amortization that does not involve any cash outflow.

Nonconventional cash flow pattern
• A pattern in which an initial outflow is not followed by a series of inflows.

Operating cash flow
• Earnings before depreciation minus taxes. It measures the cash generated from operations, not counting capital spending or working capital requirements.

Operating cash inflows
• The incremental after tax cash inflows resulting from use of a project during its life.

Price to cash flow ratio
• Price per share divided by Cash Flow Per Share. A measure of the market's expectations regarding a firm's future financial health. Provides an indication of relative value, similar to the Price-Earnings Ratio.

Real cash flow
• Constant purchasing power cash flows. Typically, cash flows measured in today s dollars. Another way to compute real cash flows is to divide the nominal future cash flows by the price level (1+expected inflation rate).
• A cash flow is expressed in real terms if the current, or date 0, purchasing power of the cash flow is given.

Relevant cash flows
• The incremental after tax cash outflow (investment) and resulting subsequent inflows associated with a proposed capital expenditure.

Scheduled cash flows
• The mortgage principal and interest payments due to be paid under the terms of the mortgage not including possible prepayments.

Statement of cash flows
• Provides a summary of the firm's operating, investment, and financing cash flows and reconciles them with changes in its cash and marketable securities during the period of concern.
• A financial statement showing a firm's cash receipts and cash payments during a specified period.

Statement of cash flows method
• A method of cash budgeting that is organized along the lines of the statement of cash flows.

Substitute cash or dividend payment
• Occurs when there has been a short sale. The lender of the security is entitled to a substitute dividend or cash payment. The party who buys the actual security is entitled to the actual dividend as well as voting rights, if any.

Symmetric cash matching
• An extension of cash flow matching that allows for the short-term borrowing of funds to satisfy a liability prior to the liability due date, resulting in a reduction in the cost of funding liabilities.

Target cash balance
• Optimal amount of cash for a firm to hold, considering the trade-off between the opportunity costs of holding too much cash and the trading costs of holding too little cash.

Terminal cash flow
• The after tax nonoperating cash flow occurring in the final year of a project, usually attributable to liquidation of the project.

Wanted for cash
• A statement displayed on market tickers indicating that a bidder will pay cash for same day settlement of a block of a specified security.

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