ST Investments
ShortTermInvestmentsMarketableSecuritiesCurrentAvailableForSaleSecuritiesDebtSecuritiesCurrentShort-term investments are financial investments a company expects to sell, collect, or have mature within one year that do not qualify as cash equivalents. They typically include Treasury bills, certificates of deposit, commercial paper, corporate and government bonds, and money market holdings with maturities too long to count as cash, along with equity securities held for liquidity.
Most companies hold them to earn a return on cash they do not need immediately, while keeping it available on short notice.
Regulation S-X Rule 5-02.2 covers marketable securities among current assets. It defers to GAAP for equity securities and asks companies to state the basis for the amount shown for other marketable securities. Under ASC 320, debt securities are classified as trading (fair value through earnings), available for sale (fair value, with unrealized changes in other comprehensive income), or held to maturity (amortized cost). Under ASC 321, most equity securities are measured at fair value with changes in earnings. In XBRL the total is commonly tagged ShortTermInvestments or MarketableSecuritiesCurrent, with more specific elements such as AvailableForSaleSecuritiesDebtSecuritiesCurrent for available-for-sale debt.
The line between cash equivalents and short-term investments is maturity. Cash equivalents are highly liquid investments with original maturities of three months or less when purchased, and anything longer that is still expected to be realized within a year falls here. Some companies report cash, cash equivalents, and short-term investments as one combined figure, while others split them. A company's classification can also change with its investment policy, so check the footnote before comparing.
Analysts usually treat short-term investments as near-cash. They are added to cash when calculating net debt, liquidity measures such as the cash ratio, and cash per share. For companies with large cash piles, the investments note shows credit quality, maturities, and any unrealized losses, which matter when interest rates move sharply.
A: Cash equivalents mature within three months of purchase and are nearly as liquid as cash. Short-term investments have longer maturities but are still expected to be realized within a year.
A: Usually yes. Most analysts subtract cash and short-term investments from total debt, since both are available to repay borrowings. Some narrower definitions subtract only cash and cash equivalents.
A: Yes. Bonds fall in price when interest rates rise, and equity securities move with the market. Losses on securities carried at fair value reduce the reported balance.
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