Investor Glossary-cash reservesInvestor Glossary-cash reservesInvestor Glossary-cash reservesInvestor Glossary-cash reservesInsightful stock market charts - Click here
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Cash Reserves

The HTML to link to this page

A company's cash reserves are the funds available to meet its needs for cash, especially unanticipated needs. What level of cash reserves is sufficient depends on the company. For example, a major airline may need $1.5 billion in cash reserves to fund operations and avoid bankruptcy. Financial analysts use a number of ratios that include cash reserves to assess capital adequacy. While a company with low cash reserves may be able to borrow, the debt service puts more pressure on future cash reserves. If cash reserves are depleted and credit is unavailable the company may default on their debts and be forced into bankruptcy. For an investment company, the term cash reserves takes on another meaning. Assets under management may include large cash reserves as part of the funds investment strategy. For example, a mutual fund might hold cash reserves in excess of what is needed for unanticipated redemptions. Similarly, a hedge fund might hold cash reserves to exploit anticipated arbitrage opportunities. For the individual, cash reserves are the savings or credit held to handle emergencies or other contingencies.

Rate this cash reserves definition...

Learn about investing with the Investor Glossary Term of the Day

Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.

Popular Terms: required rate of return, ex-dividend date, Key Rate Duration, FICO score, VIX, deferred revenue, class C shares, in escrow, wholly-owned subsidiary, reverse mortgage, minority interest, option premium, risk management, LIBOR, irrevocable trust, average price per share, 144a, implied volatility, margin rate, annual return, current ratio, dividends payable, Zero Cost Collar, real GDP, limit order, EBITDA, open position, stock market close, cancelled check, retained earnings, debt service coverage, deferred tax, phantom income, command economy, APR, ex-dividend, FTSE, per diem, 1031 exchange, labor relations, inflation, stock split, covered put, 401a, diluted share, liquidity ratio, balance sheet, 1035 exchange, quality assurance

Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use