cash-reserves

Vocabulary Word

Definition

'Cash reserves' is the money a company or person has saved for emergencies, unexpected costs, or future investments. It's like a safety net knowing you can cover costs if needed.

Examples in Different Contexts

In liquidity management, 'cash reserves' are essential for maintaining solvency and financial flexibility. A treasurer might discuss, 'Managing our cash reserves efficiently allows us to meet short-term obligations without incurring debt.'

Practice Scenarios

Business

Scenario:

Considering the unpredictability of the current market climate, we need a strong financial backup plan to ensure stability.

Response:

Our cash reserves are significant enough to cushion any financial challenges that we might face due to the changing market conditions.

Accounting

Scenario:

With the fiscal year end approaching, we need to revise our financial statement and reflect on our monetary stability.

Response:

We've maintained significant cash reserves over the past year. This should be reflected positively in our financial statement.