DEFINITION of 'Cash Is King'
The belief that money (cash) is more valuable than any other form of investment tool. The "cash is king" phrase is typically used when prices in the securities market are high and investors decide to save their cash for when prices are cheaper. It can also refer to the balance sheet or cash flow of a business; a lot of cash on hand is normally a positive sign, while strong cash flow allows a company more flexibility in regards to business decisions and potential investments.
BREAKING DOWN 'Cash Is King'
In the world of investments, investors who favor this phrase may opt to buy short-term debt instruments versus buying high-priced securities.
The phrase also refers to the ability of a corporation or a business to have enough cash on hand to cover short-term operations, buy assets such as equipment and machinery, or acquire other facilities. More businesses fail for lack of cash flow than for lack of profit.