Unrestricted Cash


DEFINITION of 'Unrestricted Cash'

Monetary reserves that are not tied to a particular use. Unrestricted cash represents instant reserves, as it can be used for any purpose and is extremely liquid. Often, in order to satisfy debt covenants, firms will have to maintain a certain level of cash on their balance sheets - the amount that exceeds the requirements is referred to as unrestricted cash.

An organization's liquid funds include cash, unrestricted cash, cash equivalents, unrestricted short-term (ST) investments, plus net short-term borrowing capacity.

BREAKING DOWN 'Unrestricted Cash'

Cash and cash equivalents represent the money that an organization can spend now, as they are assets readily available for use. In order to spend more than that, a company will have to take on a higher level of liabilities, such as through loans or accounts receivable. For some organizations with a varying pattern of cash flow, such as a non-profits, unrestricted cash can keep operations active even when funding sources dry up.

  1. Cash

    Legal tender or coins that can be used to exchange goods, debt ...
  2. Liquidity

    The degree to which an asset or security can be quickly bought ...
  3. Cash Flow

    The net amount of cash and cash-equivalents moving into and out ...
  4. Illiquid

    The state of a security or other asset that cannot easily be ...
  5. Liquid Asset

    An asset that can be converted into cash quickly and with minimal ...
  6. Accountant

    A professional who performs accounting functions such as audits ...
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  1. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  2. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  3. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  4. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  5. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  6. What can working capital be used for?

    Working capital is used to cover all of a company's short-term expenses, including inventory, payments on short-term debt ... Read Full Answer >>

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