Cash as presented on the balance sheet (usually the first line) means the money a company has in the bank, plus anything else (like stocks and bonds) that can readily be turned into cash. Really, it’s that simple. When companies talk about cash, it really is the cold, hard stuff. It’s also an easy number to validate.
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When Microsoft says it has $56 billion in cash and short-term investments, or whatever the latest number is, it means it really has that much in banks, money funds, and publicly traded securities. Of course, companies can lie. In 2003, the giant Italian company Parmalat reported on its balance sheet that it had billions in an account with Bank of America. It didn’t. In 2009, the CEO of a large Indian outsourcing company, Satyam Computer Services, acknowledged that he had “inflated the amount of cash on the balance sheet…by nearly $1 billion.”
(Excerpts from Financial Intelligence, Chapter 11 – Assets)
This is the hard stuff. Money in the bank. Money in money-market accounts. Also publicly traded stocks and bonds – the kind you can turn into cash in a day or less if you need to. Another name for this category is liquid assets. This is one of the few line items that are not subject to accountants’ discretion.