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Yes. Since the Fund meets the definition of a money market fund under the Act, the Fund may be classified as a cash equivalent in Company X's statement of cash flows. FASB Statement No. 95, Statement of Cash Flows ("FAS 95"), par. 9, indicates that items commonly considered cash equivalents include treasury bills, commercial paper, and money market funds. Although FAS 95 does not include the definition of what constitutes a money market fund, we believe it is appropriate for a money market fund that meets all of the qualifying criteria for a money market fund under the Act to be classified as a cash equivalent in the statement of cash flows.
However, If the Fund does not meet all of the qualifying criteria for a money market fund under the Act, Company X should compare the attributes of the investments made by the Fund, such as credit quality and maturity, and the weighted average maturity of the Fund's investments to the requirements for an SEC registered money market fund in order to determine if classification of its investment as a cash equivalent is appropriate. FAS 95, par. 8, states that:
"...cash equivalents are short-term, highly liquid investments that are both
a. Readily convertible to known amounts of cash
b. So near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
Generally, only investments with original maturities of three months or less qualify under that definition."
I think that if (1) the Fund's policies include a provision that requires the weighted average maturity of the Fund's securities holdings not to exceed 90 days, (2) Company X has the ability to redeem the Fund's shares daily in accordance with its cash-management policy, and (3) the Fund's investment attributes are consistent with the investment attributes of an SEC registered money market fund and the definition of cash equivalents in FAS 95, it would be appropriate for Company X's investment in the fund to be classified as a cash equivalent in its statement of cash flows.
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How does the risk of a money market mutual fund compare with that of a savings account?
The risk of a money market mutual fund is similar to that of a savings account. Both are low-risk, slow-growth savings vehicles. Money market funds are viewed as a cash equivalent, similar to a savings account.
Are tax exempt money market funds available at any time?
Tax exempt money market funds are available to purchase at any time. The funds that one may accrue by investing in such a fund should also be available to 'cash out' at any time. One would need to consult a professional to find out the specifics of any funds pros and cons.
Are money market saving certificate considered cash?
yes
What are the Short term financing options for a MNC?
it is the act of seeking or funding sources of monetary funds for a period of time less than 1 year. financial instruments usually a type of debenture, which are used to provide financing to a larger project. 1- funds from cash surplus units or from the centralised pool. 2-borrowings from international money market including euro currency market and international securities market. 3-borrowing from the host country creates sources of funds.
Functions of cash management?
There are many functions of cash management such as allocating funds to certain charities. Knowing and managing your money can tell you how much you are allowed to spend on a certain purpose.
How does the risk of a money market mutual fund compare with that of a savings account?
The risk of a money market mutual fund is similar to that of a savings account. Both are low-risk, slow-growth savings vehicles. Money market funds are viewed as a cash equivalent, similar to a savings account.
What has the author Robin Grieves written?
Robin Grieves has written: 'Cash management' -- subject(s): Cash management, Money market funds
What is intercompany market?
The intercompany involves direct lending between companies. The supply of funds in the intercompany market comes from companies that have cash flows surplus to their current requirements. The demand for funds comes from companies who do not have cash flows sufficient to meet their current obligations. Given the nature of trading within the market, it is regarded as an example of a money market.
Are tax exempt money market funds available at any time?
Tax exempt money market funds are available to purchase at any time. The funds that one may accrue by investing in such a fund should also be available to 'cash out' at any time. One would need to consult a professional to find out the specifics of any funds pros and cons.
Money Market Funds: Beating the Bank?
Way back during the Nixon era, there were hundreds of safe investment options for people to drop in their spare cash. Bank shopping for the best interest rates was easy since one could shop among banks, banks, and still more banks. Actually though, the safe money investor did not have many alternatives, as the yields were not all that great compared to institutional investors. Ultra-safe short-term investments in securities, most often beat bank rates. Money market mutual funds were born in the early 1970s. The concept was simple: money market mutual funds invested in the same ultra-safe, higher-yielding financial instruments that only the big boys with unlimited investment capital could buy. By pooling the money from thousands of investors, a decent yield is offered. Money market funds are the only type of mutual fund with a fixed share price, in other words, the share price does not fluctuate in value. The share price of stock and bond mutual funds does fluctuate from day to day. Money market funds in contrast, are locked in at $1 per share. Money market funds pay dividends, similarly to bank interest rates. However, some good money market funds offer several advantages to basic savings accounts: - Higher yields: The best money market funds pay higher yields than equivalent bank accounts. - Several tax flavors available: Bank accounts offer one tax flavor: taxable. Tax-free interest from bank accounts does not exist. Money market funds come in a variety of tax flavors, including federal and/or state tax-free dividends. - Check writing: A money market fund lets you write checks against your account, free of fees. There may be a limitation to the number of checks per month and minimum amounts; nevertheless, instant access to cash is only a check away. Money market funds can be an ideal replacement to bank savings accounts. Safety is equivalent, but the returns are much better. Money market funds are well suited for the following purposes: - Emergency cash reserve- Short-term savings goals- Investment capital awaiting final destination- Personal checking account- Business accounts Some money market accounts even allow direct deposit. So, with a higher yield and similar safety to bank accounts, money market funds are the clear choice for the wise investor.
What are the major characteristics of money market instruments?
1. Money market generates higher rate of returns than holding cash. 2. Money Market funds are liquid 3. low risk The three fundamental characteristics of money market instruments are: (a) low default risk, (b) short-term to maturity, and (c) high marketability. These characteristics give money market instruments their characteristic of being low risk. Money market investors demand low-risk securities because their cash excesses are only temporary.
Are Cash in restricted fund assets?
Yes, Cash Can be restricted Funds. If a corporation keeps the money separate just for a limited purpose then it is defined as restricted funds.
Who is the regulator of money market in India?
The Reserve Bank of India is the largest regulator of the Indian Money Market. The Reserve Bank of India regulates the money market by controlling how much money is put into the economy and to what industries they loan funds to. This type of direct control allows the banks to invest in companies that they believe will produce the most jobs and better circulate cash.
What are money market mutual funds?
"Money Market" units are securities which can only ever appreciate in quantity (their value is always exactly $1 per unit). So holding money market units (I forget the precise term, sorry) is like putting money in a savings account, although generally money market accounts grow faster. Right now, yields are pretty abysmal, though.
Are money market saving certificate considered cash?
yes
How does cash flow work and what is the benefit of cash flow?
If you don't have funds or budget your money you won't have positive cash flow. The benefits of positive cash flow are: you won't have financial issues and you will have enough money to purchase required products.
What are the functions and duties of money markets in Nigeria?
The money market allows money available for short periods to be directed to those who can use it. The functions fulfilled by the money market are the following:Provides a mechanism such that institutions in a deficit position can borrow funds temporarily and institutions in a surplus position can invest the funds temporarily.The money market allows institutions to hold a proportion of their funds in liquid assets that will enable them realise cash quickly should the need arise.Enables the imbalances in the supply of money between the financial system as a whole and the government to be smoothed out. Through the conduct of Open Market Operation, the Central Bank will, through MMDs, daily offer to buy/sell money market instruments to the public in order to influence the money supply level. Where the intention is to decrease money supply (i.e. mop up liquidity), the CBN will sell instruments to the market. Conversely, where one intends to increase the money supply level (provide liquidity), the CBN will offers to buy instruments from the market.
