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are cash equivalents better than cash | cash equivalents have certain benefits over cash that make them better for some investors however both types of financial instruments are very similar and yield similarly low yields the difference between cash and cash equivalents is minimal although cash equivalents can often yield a bit more interest | |
why do companies hold cash equivalents | cash equivalents often have slightly greater yields than cash even buying one month treasury bills may yield higher rates than what a company may get on their savings account cash yields also allows a company to strategically hold low risk investments for future use while still attempting to preserve purchasing power b... | |
what makes a financial instrument a cash equivalent | financial instruments are defined as cash equivalents if they are highly liquid products that have active marketplaces are without liquidation restrictions and are easily convertible to cash a company should be able to sell or liquidate a cash equivalent immediately on demand without fear or material loss to the produc... | |
what is cash back | cash back also known as cashback refers to two types of financial transactions related to credit and debit cards that have grown increasingly popular in the last two decades most commonly it s a credit card benefit that refunds the cardholder a small percentage of the amount spent on each purchase above a certain dolla... | |
how cash back works | an outgrowth of credit card issuers general rewards programs cash back programs date to 1986 when the discover card was launched nationally introducing the concept since then they have become ubiquitous and nearly every major card issuer now offers the feature on at least one of its products it s an incentive for exist... | |
when you download the app it will show you participating retailers and products that can earn you kicks you can even earn a kick for entering a store without making a purchase through bluetooth recognition 13 the app also may offer users exclusive incentives and discounts along with rewards points 14 | shopkick has an a rating from the bbb but as of july 29 2021 there were only 27 customer reviews most of which involved complaints and averaged out to a 1 44 rating out of five stars 15cash back in handwith debit cards and some credit cards a customer may also get the opportunity to receive cash back immediately at a s... | |
what does cash back mean | cash back usually refers to a rewards program that returns a percentage of each purchase to the buyer it can also refer to certain types of debit cards that allow cardholders to withdraw cash from their accounts at a merchant point of sale | |
is cash back free money | not exactly when a credit card offers cash back rewards they are betting that the cardholders increased spending will exceed the money spent on cash rewards cardholders pay for cash back through higher aprs and merchant fees | |
what stores give free cash back | multiple stores offer cash back rewards how much depends on their rewards program kohl s dick s sporting goods the home depot and cvs among others offer their customers cash back rewards programs 18can i get a cash back signing bonus if you sign up for a cash back card with a cash signing bonus it could be worth anywhe... | |
what are the best cash back credit cards | credit card deals change frequently so it is worth taking time to research the latest deals you can also check out investopedia s review of the best credit cards currently available the bottom linesigning up with a cash back rewards credit or debit card is a way to earn some extra cash based on your purchases you can u... | |
what is a cash balance pension plan | a cash balance pension plan is a defined benefit pension plan with the option of a lifetime annuity the employer credits a participant s account with a set percentage of their yearly compensation plus interest charges for a cash balance plan the funding limits funding requirements and investment risk are based on defin... | |
when combined with a 401 k plan cash balance employer contributions for rank and file employees usually amount to roughly 6 9 of pay compared with the 4 7 contributions that are typical of 401 k plans only 5 | participants receive an annual interest credit this credit may be set at a fixed rate such as 5 or a variable rate such as the 30 year treasury rate at retirement participants can take an annuity based on their account balance or a lump sum which can then be rolled into an ira or another employer s plan 1cash balance p... | |
is a cash balance pension plan better than a 401 k | both can be excellent retirement plans which one is better depends on your preferences goals how long you might be with an employer and current income | |
what can i do with a cash balance plan | you can choose to make withdrawals or a lump sum payout if you choose a lump sum you can roll it into an ira or other retirement plan if allowed | |
what happens to my cash balance pension if i quit | your cash balance pension is portable so you can take the vested portion with you when you quit and roll it into another retirement account the bottom linea cash balance pension plan is similar to other retirement accounts the contributions are tax deferred for the employee and the principal grows with compounding inte... | |
what is a cash budget | a cash budget is an estimation of the cash flows of a business over a specific period of time this could be for a weekly monthly quarterly or annual budget this budget is used to assess whether the entity has sufficient cash to continue operating over the given time frame the cash budget provides a company insight into... | |
how a cash budget works | companies use sales and production forecasts to create a cash budget along with assumptions about necessary spending and accounts receivable collections a cash budget is necessary to assess whether a company will have enough cash to continue operations if a company does not have enough liquidity to operate it must rais... | |
what are the steps of creating a cash budget | the first step to creating a cash budget is to establish reliable forecasts of the company s cash inflows and outflows some of these flows will be predictable such as rent and payroll costs others like sales figures will tend to be more variable once these figures have been estimated it is possible to prepare a cash bu... | |
what expenses should be included in a cash budget | a cash budget should take into account expected cash flows such as revenue as well as operational outflows due to returns payroll rent utilities supplies and other costs of running the business | |
how do you prepare a cash budget | this will depend on the time frame for which the budget is being prepared a short term cash budget of a few weeks will only account for day to day expenses related to funding and supplying a company s operations while a cash budget for a quarter or longer might also account for larger expenses like equipment capital in... | |
what is the cash conversion cycle ccc | the cash conversion cycle ccc also called the net operating cycle or cash cycle is a metric that expresses in days how long it takes a company to convert the cash spent on inventory back into cash from selling its product or service the shorter the cash cycle the better as it indicates less time that cash is bound in a... | |
what the cash conversion cycle can tell you | boosting sales of inventory for profit is the primary way for a business to make more earnings but how does one sell more stuff if cash is easily available at regular intervals then one can churn out more sales for profits as frequent availability of capital leads to more products to make and sell a company can acquire... | |
what does the cash conversion cycle measure | the cash conversion cycle ccc is one of several measures of management effectiveness it measures how fast a company can convert cash on hand into even more cash on hand the ccc does this by following the cash or the capital investment as it is first converted into inventory and accounts payable ap through sales and acc... | |
what is the cash conversion cycle formula | cash conversion cycle days inventory outstanding days sales outstanding days payables outstanding | |
how does inventory turnover affect the cash conversion cycle | a higher or quicker inventory turnover decreases the cash conversion cycle thus a better inventory turnover is a positive for the ccc and a company s overall efficiency the bottom line | |
what is a cash cow | a cash cow is one of the four categories quadrants in the growth share bcg matrix that represents a product product line or company with a large market share within a mature industry a cash cow is also a reference to a business product or asset that once acquired and paid off will produce consistent cash flows over its... | |
what is a cash dividend | a cash dividend is the distribution of funds or money paid to stockholders generally as part of the corporation s current earnings or accumulated profits cash dividends are paid directly in money as opposed to being paid as a stock dividend or other form of value most brokers offer a choice to reinvest or accept cash d... | |
how a cash dividend works | cash dividends are a common way for companies to return capital to their shareholders in the form of periodic cash payments typically quarterly but some stocks may pay these bonuses on a monthly annual or semiannual basis while many firms pay regular dividends there are special cash dividends that are distributed to sh... | |
which companies pay dividends | companies that pay dividends typically enjoy stable cash flows and their businesses are commonly beyond the growth stage this business growth cycle partially explains why growth firms do not pay dividends they need these funds to expand their operations build factories and increase their personnel certain dividend payi... | |
when a corporation declares a dividend it debits its retained earnings and credits a liability account called dividend payable on the date of payment the company reverses the dividend payable with a debit entry and credits its cash account for the respective cash outflow | cash dividends do not affect a company s income statement however they shrink a company s shareholders equity and cash balance by the same amount firms must report any cash dividend as payments in the financing activity section of their cash flow statement the easiest way to compare cash dividends across companies is t... | |
what is a stock dividend | less common than cash dividends stock dividends instead pay shareholders with additional shares of stock | |
what is a special dividend | a special dividend is paid to shareholders outside of the regular dividend schedule it may result from a windfall earnings spin off or other corporate action that is seen as a one off in general special dividends are rare but larger than ordinary dividends | |
what are dividend aristocrats | a dividend aristocrat is a stock that increases its dividend for at least 25 consecutive years examples include at t exxonmobil caterpillar 3m and ibm among others | |
what are cash equivalents | cash equivalents are securities that are meant for short term investing normally they have solid credit quality and are highly liquid true to their name they are considered equivalent to cash because they can be converted to actual cash quickly the phrase cash and cash equivalents is found on balance sheets in the curr... | |
when reported on financial statements investments in these types of liquid accounts are often combined with cash and represent a company s total holding of money and liquid investments | types of cash equivalentstreasury bills are commonly referred to as t bills these are securities issued by the united states department of the treasury that mature in one year or less companies financial institutions and individuals who buy t bills lend the government money which the government pays back upon maturity ... | |
is highly liquid | may offer fixed rates of interest | |
are generally considered to be safe investments | often earns a much lower rate of interest than longer term less liquid investmentsstill subject to risk of default by the issuing entitymay not be covered by federal insuranceexample of cash equivalentsin 2021 microsoft invested in held and conducted transactions with cash equivalents throughout the year | |
how are cash equivalents used | if a company has excess cash on hand it might invest it in a cash equivalent called a money market fund this fund is a collection of short term investments i e generally with maturities of six months or less that earns a higher yield than money in a bank account when the company decides it needs cash it sells a portion... | |
why are cash equivalents important | cash equivalents strike a balance between investing risk and liquidity they give a company easy access to cash should it need it quickly in addition cash equivalents allow companies to earn some amount of interest as they plan how to use their money in the long term | |
what is the difference between cash and cash equivalents | cash is ownership of actual u s dollars or other currencies cash equivalents are interest earning financial vehicles investments that are widely traded highly liquid and easy to convert to cash cash equivalents are not identical to cash in hand though they have such low risk and high liquidity that they re often consid... | |
what is cash flow | cash flow is the net cash and cash equivalents transferred in and out of a company cash received represents inflows while money spent represents outflows a company creates value for shareholders through its ability to generate positive cash flows and maximize long term free cash flow fcf this is the cash from normal bu... | |
where | understanding cash flowcash flow refers to the money that goes in and out of a business businesses take in money from sales as revenues inflow and spend money on expenses outflow they may also receive income from interest investments royalties and licensing agreements and sell products on credit assessing cash flows is... | |
how to analyze cash flows | using the cash flow statement in conjunction with other financial statements can help analysts and investors arrive at various metrics and ratios used to make informed decisions and recommendations example of cash flowbelow is walmart s wmt cash flow statement for the fiscal year ending on jan 31 2024 all amounts are i... | |
how are cash flows different than revenues | revenue is the income earned from selling goods and services if an item is sold on credit or via a subscription payment plan money may not yet be received from those sales and are booked as accounts receivable these do not represent actual cash flows into the company at the time cash flows also track outflows and inflo... | |
what is the difference between cash flow and profit | cash flow isn t the same as profit profit is specifically used to measure a company s financial success or how much money it makes overall this is the amount of money that is left after a company pays off all its obligations profit is found by subtracting a company s expenses from its revenues 1 | |
what is free cash flow and why is it important | free cash flow is left over after a company pays for its operating expenses and capex it is the remaining money after items like payroll rent and taxes companies are free to use fcf as they please | |
do companies need to report a cash flow statement | the cash flow statement complements the balance sheet and income statement it is part of a public company s financial reporting requirements since 1987 4 | |
why is the price to cash flows ratio used | the price to cash flow p cf ratio is a stock multiple that measures the value of a stock s price relative to its operating cash flow per share this ratio uses operating cash flow which adds back non cash expenses such as depreciation and amortization to net income p cf is especially useful for valuing stocks with posit... | |
what is cash flow from financing activities | cash flow from financing activities cff is a section of a company s cash flow statement that shows the net flows of cash that are used to fund the company financing activities include transactions involving debt equity and dividends cash flow from financing activities provides investors with insight into a company s fi... | |
what is cash flow from investing activities | cash flow from investing activities cfi is one of the sections on the cash flow statement that reports how much cash has been generated or spent from various investment related activities in a specific period investing activities include purchases of physical assets investments in securities or the sale of securities o... | |
what activities are included in cash flow from investing activities | the activities included in cash flow from investing actives are capital expenditures lending money and the sale of investment securities along with this expenditures in property plant and equipment fall within this category as they are a long term investment | |
how do you calculate cash flow from investing activities | consider a hypothetical example of google s net annual cash flow from investing activities for the year the company spent 30 billion on capital expenditures of which the majority were fixed assets along with this it purchased 5 billion in investments and spent 1 billion on acquisitions the company also realized a posit... | |
why is cash flow from investing activities important | cash flow from investing activities is important because it shows how a company is allocating cash for the long term for instance a company may invest in fixed assets such as property plant and equipment to grow the business while this signals a negative cash flow from investing activities in the short term it may help... | |
what is cash flow from operating activities cfo | cash flow from operating activities cfo indicates the amount of money a company brings in from its ongoing regular business activities such as manufacturing and selling goods or providing a service to customers it is the first section depicted on a company s cash flow statement cash flow from operating activities does ... | |
where funds from operations net income depreciation depletion amortization deferred taxes investment tax credit other funds | this format is used for reporting cash flow details by finance portals like marketwatch orcash flow from operating activities net income depreciation depletion amortization adjustments to net income changes in accounts receivables changes in liabilities changes in inventories changes in other operating activitiesthis f... | |
what is a cash flow statement | a cash flow statement is a financial statement that provides aggregate data regarding all cash inflows that a company receives from its ongoing operations and external investment sources it also includes all cash outflows that pay for business activities and investments during a given period a company s financial state... | |
how cash flow statements work | every company that sells and offers its stock to the public must file financial reports and statements with the u s securities and exchange commission sec 2 the four main financial statements are 3there are two different methods of accounting they are 4profitable companies can fail to adequately manage cash flow which ... | |
how a cash flow statement is organized | as stated above a cash flow statement is divided into three main parts operations investing and financing these break down as follows 3the first section of the cash flow statement covers cash flows from operating activities cfo and includes transactions from all operational business activities the cfo section begins wi... | |
when capital expenditures increase it generally reduces the cash flow however that s not always a bad thing as it may indicate that a company is making investments in its future operations companies with high capital expenditures tend to be those that are growing | positive cash flows within the cfi section which can be generated in such ways as selling equipment or property can be considered good however investors usually prefer that companies generate their cash flow primarily from business operations cash flows from financing cff is the last section of the cash flow statement ... | |
which kinds of cash flows show up in operations | cash inflows and outflows from business activities such as buying and selling inventory and supplies paying salaries accounts payable depreciation amortization and prepaid items booked as revenues and expenses all show up in operations | |
when capital expenditures increase what happens to cash flow | generally cash flow is reduced when capital expenditures increase as the cash has been used to invest in future operations thus promoting the company s growth | |
what does a negative cash flow from financing mean | a negative number can show that a company is paying off debt making dividend payments or buying back its stock the bottom linethe cash flow statement has three key sections operations investments and financing even if the business uses accrual accounting as its main reporting system the cash flow statement is focused o... | |
what is cash management | the term cash management refers to the process of collecting and managing cash flows cash management can be important for both individuals and companies it is a key component of a company s financial stability in business cash is also essential for people s financial stability while also usually considered as part of a... | |
how cash management works | cash is among the primary assets that individuals and companies use to pay their obligations and invest managing cash is what entities do on a day to day basis to take care of the inflows and outflows of their money proper cash management can improve an entity s financial situation and liquidity problems for individual... | |
why is cash management important | cash management is the process of managing cash inflows and outflows this process is important for individuals and businesses because cash is the primary asset used to invest and pay any liabilities there are many cash management options available such as using excess cash to pay down lines of credit with a credit swee... | |
how can you improve your cash management | there are a number of ways an individual or business can improve their cash management some of these steps include improving their accounts receivables increasing income encouraging clients to pay early on time investing excess cash seeking out better financing rates on debt safeguarding bank accounts to prevent fraud ... | |
what is an example of cash management | cash management can come in various forms including the improvement of accounts payable processes let s say a business has an existing and good relationship with a vendor the two have been doing business with one another for the last five years the vendor ships supplies to the business every month and requires payment ... | |
what is cash on cash return | a cash on cash return is a rate of return often used in real estate transactions that calculates the cash income earned on the cash invested in a property put simply cash on cash return measures the annual return the investor made on the property in relation to the amount of mortgage paid during the same year it is con... | |
what does cash on cash return tell you | cash on cash return sometimes referred to as the cash yield on a property investment measures commercial real estate investment performance and is one of the most important real estate roi calculations essentially this metric provides business owners and investors with an easy to understand analysis of the business pla... | |
are cash on cash return and roi identical | though they are often used interchangeably cash on cash return and roi return on investment are not the same when debt is used in a real estate transaction most commercial properties involve debt and the actual cash return on the investment differs from the standard return on investment roi roi calculates the total ret... | |
how is cash on cash return calculated | cash on cash returns are calculated using an investment property s pre tax cash inflows received by the investor and the pre tax outflows paid by the investor essentially it divides the net cash flow by the total cash invested for example an investor purchases a property for 1 million putting 100 000 cash as a down pay... | |
what is cash on delivery cod | cash on delivery cod is a type of transaction where the recipient pays for a good at the time of delivery rather than using credit the terms and accepted forms of payment vary according to the payment provisions of the purchase agreement cash on delivery is also referred to as collect on delivery since delivery may all... | |
what is the meaning of cash on delivery | cash on delivery is when a buyer pays for goods or services once they are received cash in advance on the other hand is when payment is made before the goods or services are shipped for example an ecommerce credit transaction | |
how does cash on delivery work | buyers place an order for example on a website and request delivery the customer does not make payment while ordering the item and chooses cash on delivery as a payment method once the order is placed an invoice is prepared by the seller which is attached to the parcel the parcel is shipped from the seller to the addre... | |
what are examples of cash on delivery | examples of cash on delivery are when customers pay for a pizza that is delivered to their home when a courier delivers something that a customer has agreed to pay for when it is delivered or when a customer picks up clothing from the dry cleaning store some online stores will allow cash on delivery the bottom linecash... | |
what is a cash out refinance | a cash out refinance is a mortgage refinancing option that lets you convert home equity into cash a new mortgage is taken out for more than your previous mortgage balance and the difference is paid to you in cash in the real estate world refinancing in general is a popular process for replacing an existing mortgage wit... | |
how a cash out refinance works | a cash out refinance allows you to use your home as collateral for a new loan as well as some cash creating a new mortgage for a larger amount than what is currently owed getting cash by using the equity in your home can be an easy way to get funds for emergencies expenses and wants borrowers seeking a cash out refinan... | |
what is home equity | home equity is the market value of your home minus any liens such as the amount you owe on a mortgage or a home equity loan the equity in your home can fluctuate based on real estate market conditions in the community or region where you live | |
how do i calculate home equity | to calculate the equity in your home simply subtract the mortgage balance owed from the market value of the property for example if your home is valued at 600 000 and you owe 200 000 then you have 400 000 in home equity | |
how can i use the money from a cash out refinance | there are no restrictions on how you can use the funds from a cash out refinance many borrowers use the cash to pay for a big expense such as to fund an education or pay down debt or as an emergency fund the bottom linerefinancing is a means of replacing an existing mortgage with a new one that presumably has better te... | |
what is the cash ratio | the cash ratio is a measurement of a company s liquidity it calculates the ratio of a company s total cash and cash equivalents to its current liabilities the metric evaluates a company s ability to repay its short term debt with cash or near cash resources such as easily marketable securities this information is usefu... | |
what cash ratio can tell you | the cash ratio is most commonly used as a measure of a company s liquidity this metric shows the company s ability to pay all current liabilities immediately without having to sell or liquidate other assets a cash ratio is expressed as a numeral greater or less than one the company has the same amount of current liabil... | |
what is a good cash ratio | the cash ratio varies between industries because some sectors rely more heavily on short term debt and financing such as those that rely on quick inventory turnover a cash ratio equal to or greater than one generally indicates that a company has enough cash and cash equivalents to entirely pay off all short term debts ... | |
what does the cash ratio measure | liquidity is a measurement of a company s ability to pay its current liabilities the cash ratio is one way to measure a company s liquidity a company with high liquidity can pay its short term bills as they come due it s going to have a more difficult time paying short term bills if it has low liquidity | |
how do you calculate the cash ratio | the cash ratio is calculated by dividing cash by current liabilities the cash portion of the calculation also includes cash equivalents such as marketable securities | |
is it better to have a high or low cash ratio | it s often better to have a high cash ratio a company has more cash on hand lower short term liabilities or a combination of the two it also means a company will have a greater ability to pay off current debts as they come due a company s cash ratio can be considered too high a company may be inefficient in managing ca... | |
what is cash surrender value | cash surrender value is money a life insurance policyholder receives for canceling their policy before it matures or they pass away this cash value is the savings component of most permanent life insurance policies such as whole life and universal life it is also known as policyholder s equity the insurance company cou... | |
when you surrender a policy you receive whatever you paid in premiums back tax free if you receive more than you paid in total premiums you owe income tax on your earnings 1 | cash surrender value vs cash valuein the early years of a policy life insurance companies can deduct fees upon cash surrender what you receive for your cash surrender value could be less than your current cash value balance after subtracting these fees 1the surrender charge can start as high as 10 to 35 of your policy ... | |
when determining your cash surrender value you must consider any fees your company will charge for canceling your policy check your cash value balance then subtract any surrender charges to determine how much money you will receive in a cash surrender | for example suppose you take out a variable universal life insurance policy for 100 000 you make five years of payments and build up a cash value of 10 000 however the surrender change will cost you 10 of the cash value you will have to pay 1 000 in charges and you will only get 9 000 out of the cash surrender | |
don t overestimate your cash surrender value which is not reflective of the amount of coverage you have taken out for the death benefit a cash value is tied to the policy as a benefit to help offset the rise in premiums as you grow older and offers policyholders access to money they can borrow | cash surrender value for universal and variable lifeuniversal life insurance universal variable life and variable life insurance policies typically include a surrender period if you cancel during this period you may owe a surrender charge of up to 35 of your cash value balance 2 the insurer will deduct this charge from... | |
should you surrender your policy | if you surrender your policy you end your life insurance contract you stop having to pay premiums and will receive all your cash surrender value the downside though is you lose your life insurance protection your heirs will no longer receive a death benefit when you pass away 1if you only need some of your cash value y... | |
which kinds of life insurance have cash surrender values | whole universal variable universal and indexed universal life insurance often have a cash value component to them if you surrender the policy you receive your cash value minus any surrender charges 4 | |
should you get a policy with cash value | it depends on your individual financial situation if you have maxed out contributions to your retirement account have a cash nest egg saved for emergencies and you can afford the monthly premiums on a permanent life insurance policy with a cash value benefit it may be a good choice however if you cannot afford a lifeti... | |
what is cash value life insurance | cash value life insurance is a form of permanent life insurance lasting for the lifetime of the holder that features a cash value savings component the policyholder can use the cash value for many purposes including borrowing or withdrawing cash from it or using it to pay policy premiums 1investopedia xiaojie liu | |
how cash value life insurance works | cash value insurance is permanent life insurance because it provides coverage for the policyholder s life usually cash value life insurance has higher premiums than term life insurance because of the cash value element a portion of each premium payment is allocated to the cost of insurance and the remainder deposited i... | |
why consider cash value life insurance | policyholders of permanent life insurance have the ability to borrow against the accumulated cash value which comes from regular premium payments plus any interest and dividends credited to the policy | |
should i look into buying a cash value life insurance policy | those looking to build a nest egg over a time horizon of several decades may want to consider cash value life insurance as a savings option alongside a retirement plan like an ira or 401 k be aware that cash values often don t begin accruing until two to five years have passed and you may have to wait several years to ... | |
are cash value policy premiums high | yes cash value policy premiums are typically higher than regular life insurance because part of your payment goes toward savings | |
what happens when you withdraw cash from life insurance | if you make a withdrawal from the cash value in a life insurance policy the death benefit will decrease if you withdraw everything the policy terminates withdrawing money from life insurance is tax advantaged in that the irs considers your withdrawals a return of the premiums you paid for the policy so you can withdraw... | |
what was the catalog of federal domestic assistance cfda | the catalog of federal domestic assistance cfda was a database of various federal assistance programs in the u s it provided a full listing of programs available to corporations government agencies u s territories and individual citizens however the cfda has since changed its information now accessible through the sam ... |
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