Statement of cash flows Relevance of Cash Flows Cash Defined refers to cash and cash equivalents. Cash equivalents are short-term, highly liquid investments that are(1)readily convertible to known amounts of cash, and (2) near maturity (typically within 3 months) with limited risk of price changes due to interest rate shiftsStatement of Cash Flows Relevance of Cash Flows Cash Defined -- refers to cash and cash equivalents. Cash equivalents are short-term, highly liquid investments that are (1) readily convertible to known amounts of cash, and (2) near maturity (typically within 3 months) with limited risk of price changes due to interest rate shifts