When companies temporarily have excess cash not needed for current operations, they often invest it in debt or equity securities. These investments can be short term or long term in nature.​
The primary reason companies invest short-term is to earn interest or dividends and to realize gains from the increase in the market price of the securities. When companies make temporary investments, they are listed as current assets on the balance sheet.​
Long-term investments may be made for the same reasons. However, many long-term investments involve the purchase of stock of another company. This type of purchase may be made for strategic reasons such as an attempt to reduce operating costs, replace management, expand, or integrate.

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