Cash and equivalents refer to assets that a company holds in the form of cash or other highly liquid investments that are readily convertible to cash. These assets are generally reported on the balance sheet of a company as part of its current assets and are considered to be the most liquid asset.

Cash refers to physical currency, such as banknotes and coins, that a company holds. It can also include deposits in checking or savings accounts, money market funds, and other short-term investments that are readily convertible to cash.

Equivalents refer to investments that are highly liquid and have a very low risk of losing value. These investments may include short-term government bonds, commercial paper, certificates of deposit, and other highly rated securities with a maturity of three months or less.

Cash and equivalents are important because they provide a company with the ability to meet its short-term obligations and fund its day-to-day operations. They also provide a cushion against unexpected events, such as economic downturns or unexpected expenses.

Investors and analysts often look at a company's cash and equivalents as an indicator of its financial health and liquidity. A high level of cash and equivalents can suggest that a company is well-positioned to weather unexpected events or make strategic investments, while a low level may indicate that a company is at risk of running into financial difficulties.