MANAGEMENT

Detailed explanation-1: -Cash and Cash Equivalents are entered as current assets on a company’s balance sheet. The total value of cash and cash equivalents is calculated by adding together the total of all cash accounts and any highly liquid investments that can be easily converted into cash that qualify as a cash equivalent.

Detailed explanation-2: -Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets. The Current Assets account is important because it demonstrates a company’s short-term liquidity and ability to pay its short-term obligations.

Detailed explanation-3: -These cash equivalents are included in the calculation of numerous measures of liquidity: Cash Ratio = Cash / Current Liabilities. Current Ratio = Current Assets / Current Liabilities. Quick Ratio = (Cash & Equivalents + A/R) / Current Liabilities.