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. Cash equivalents include bank accounts and marketable securities, which are debt securities with maturities of less than 90 days. _Difference Between Cash and Cash Equivalents?_ Direct ownership of a government-issued currency is Cash. This may take the form of physical cash (bills and coins) or digital cash (i.e. bank account balances). Whereas Cash equivalents are short-term investments that can be easily liquidate, carry low risk of loss, and have active marketplaces to ensure quick transacting. These instruments can easily be converted to cash but are classified differently because they are not actual claims of ownership of cash. Thus, cash equivalents help companies with their working capital needs since these liquid assets are used to pay off current liabilities, which are short-term debts and bills