What is a Cash Hoard
A cash hoard is a large amount of available money held on hand by a company. Typically, this amount is much larger than what would be needed to satisfy short-term liability obligations. The reason for the cash hoard could be anticipation of facilitating future projects or meeting future financial obligations. At times, carrying a large cash hoard can be used as an insurance policy against downturns in the business. A cash hoard held by a company often makes the company attractive as a target of acquisition because of its sound financial situation.
Also referred to as a "cash reserve."
BREAKING DOWN Cash Hoard
Many large U.S. companies keep large cash reserves. Analysts make frequent speculations regarding the purpose of the firms' surprisingly large cash hoards. Some economists argue that government measures to reduce interest rates and encourage borrowing and spending have, instead, led corporations to hoard more cash, rather than investing the money in expansions that would lead to new jobs. When the economy falters, companies may choose to increase their cash-to-assets ratio to avoid loans and debts, and to limit risks.