Cash Reserves Definition

What are cash reserves?

Cash reserves refer to cash that a business or individual keeps to meet short-term and emergency financing needs. Short-term investments that provide customers with quick access to their money, often in exchange for a lower rate of return, may also be referred to as cash reserves. Examples include money market funds and Goods of treasure (Goods of treasure).

Key points to remember

  • Cash reserves refer to cash that a business or individual keeps on hand to meet emergency financing needs.
  • Very liquid short-term investments, such as money market funds and treasury bills, may also be referred to as cash reserves.
  • Cash reserves are useful when cash is needed immediately for a large purchase or