as the sum of net income plus noncash expenses that are deducted in calculating net income. Cash flow time line Line depicting the operating activities and cash flows for a firm over a particular period. Cash in Advance A payment term meaning the buyer pays the seller before shipment is effected. Cash In Lieu (CIL) In a typical exchange offer, "old" shares of the target company are exchanged for "new shares". Cash investments Short-termdebt instrumentssuch as commercial paper, banker's acceptances, and Treasury billsthat mature in less than one year. Also known as money marketinstruments or cash reserves. Cash management Refers to the efficient management of cash in a business in order to put the cash to work more quickly and to keep the cash in applications that produce income, such as the use of lock boxes for payments. Cash management bill Very short-maturity bills that the Treasury occasionally sells because its cash balances are down and it needs money for a few days. Cash markets Also called spot markets, these are markets that involve the immediate delivery of a security or instrument. Related: Derivative markets. Cash offer Often used in risk arbitrage. Proposal, either hostile or friendly, to acquire a target company through the payment of cash for the stock of the target. Compare to exchange offer. Cash-on-cash return A method used to find the return on investments when there is no activesecondary market. The yield is determined by dividing the annual cash income by the total investment. See: Current yield or yield to maturity. Cash on delivery (COD) In the context of securities, this refers to the practice of institutional investors paying the full purchase price for securities in cash. Cash-out Laws These laws enable shareholders to sell their stakes to a "controlling" shareholder at a price based on the highest price of recently acquired shares. This works something like Fair-Price provisions extended to nontakeover situations. A few states have these laws. Cash plus convertible Convertible bond that requires cash payment upon conversion. Cash position The percentage of a mutual fund'sassetsinvested in short-term reserves, such as US Treasury bills or other money marketinstruments. Cash price Applies to derivative products. See: Spot price. Cash ratio The proportion of a firm'sassets held as cash. Cash reserves See: Cash investments Cash sale/settlement Transaction in which a contract is settled on the same day as the trade date, or the next day if the trade occurs after 2:30 p.m. EST and the parties agree to this procedure. Often occurs because a party is strapped for cash and cannot wait until the regular three-business daysettlement. See: Settlement date. Cash Settlement The process by which the terms of an option contract are fulfilled through the payment or receipt in dollars of the amount by which the option is in-the-money as opposed to delivering or receiving the underlying stock. Cash settlement contracts Futures contracts such as stock index futures that settle for cash and do not involve delivery of the underlying. Cash-surrender value The amount an insurance company will pay if the policyholdertenders or cashes in a whole