Cash equivalents definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Cash equivalents can be defined as: Short-term investment assets that are readily convertible to a known cash amount or sufficiently close to their maturity date (usually within 90 days) so that market value is not sensitive to interest rate changes. When looking at the line item on a balance sheet we generally see cash and cash equivalents. This line item will include all cash items but will also include cash equivalent items. Cash items include currency, checking accounts and savings accounts. Cash equivalents include accounts that are highly liquid. Cash equivalents can include some securities and short-term government bonds.
