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Tuesday, June 10, 2014

Cash Reserves

Cash Reserve refers to cash on hand or such investment that can be liquidated at any time and that, too, without losing any value. Of course, though such investment earns less but is secured. Bank Fixed Deposit is best example of such investment. 

Cash Reserve is for short term and emergency funding. Generally cash reserve is estimated as requirement for 8-month emergency funding.

Cash-on-hand, Bank balances and FD are best example of cash reserve. Individual or company that lack sufficient cash reserve can face payment problems or even may go bankrupt. 

So it is a must to keep cash reserve for both company and individual.
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