COMM-1107EL Chapter Notes - Chapter 5: Cash Flow, Current Liability, Quick Ratio

• School: Laurentian
• Department: Commerce and Administration
• Course: COMM-1107EL
• Professor: Kayla Levesque

Document Summary

Short-term investments (marketable securities) are investments that a company plans to hold for 1 year or less. These investments allow the company to invest excess cash for a short period and earn a return until the cash is needed. Because short-term investments are the next most-liquid asset after cash, we report short-term investments immediately after cash and before receivables on the balance sheet. One common type of short-term investment is a held-for-trading investment. The purpose of owning a held-for-trading investment is to hold it for a short time and then sell it for more than its cost. These can be shares or bonds in another company. Held-for-trading investments are reported on the balance sheet at their fair value. An investments fair value is the amount a willing buyer would pay to a willing seller to acquire the investment (ex. Assume shares have risen in value by 2,000 and the fair value has increased.