CHAPTER VDay-to-Day Financing

Why Cash is King

Unlike in a chess game, in finance, this King is the most versatile and easy to maneuver. It’s about liquidity.

HAVE YOU ever heard the expression “Cash is King”? I heard it in business classes and around the office for a while before I really understood what it meant. You’ve probably guessed that it either means that money is king—in the sense that it makes the world go ‘round—or that compared to other forms of business assets, paper money is king because it’s the easiest to convert into other things—equipment, investment accounts, expansion, tools, etc.

Although we talk about cash in everyday conversation to mean the wad of bills you carry around in your wallet or purse, for accountants and financial ...

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