A Commentary on Company’s Cash and Cash Equivalent

This is a commentary on a company’s cash and cash equivalents and how are these items treated and presented in their Statements of Financial Position.

The company doesn’t have cash equivalents. Company’s Cash is classified as current asset and presented on their Statements of Financial Position and includes currency held by the company, on hand and in bank accounts.

Cash is a medium of exchange, a store of value and a unit of account and a business needs to have sufficient cash in order to be able to pay its liabilities. As per company’s financial report, it has higher cash ratio to current liabilities which suggests that the company is liquid. Which means that the company is expected not to face any difficulty in paying its short-term liabilities.

The company keep a small amount of cash which is recorded as Revolving Fund for day to day expenses and keep larger percentage of cash at its various bank accounts.