Target Cash Balance
The ideal amount of cash that a company wishes to hold in reserve at any given point in time. This figure hopes to strike a balance between the investment opportunity costs of holding too much cash and the balance sheet costs of holding too little. Companies with excess cash on hand may be missing out on investment opportunities, while companies that are cash poor can often be forced to make otherwise undesirable transactions to free up more operating capital.
It is wise for individual investors to set their own target cash balance as well. Through portfolio management and clearly defined financial goals, investors can at least approximate what percentage of their holdings should be in cash to avoid the pitfalls listed above.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
Target cash balance — Optimal amount of cash for a firm to hold, considering the trade off between the opportunity costs of holding too much cash and the trading costs of holding too little cash. The New York Times Financial Glossary * * * target cash balance UK US… … Financial and business terms
target cash balance — Optimal amount of cash for a firm to hold, considering the trade off between the opportunity costs of holding too much cash and the trading costs of holding too little cash. Bloomberg Financial Dictionary * * * target cash balance UK US noun [U]… … Financial and business terms
target cash balance — Fin the amount of cash that a company would like to have in hand … The ultimate business dictionary
cash balance — ➔ balance1 * * * cash balance UK US noun [U] ACCOUNTING ► the amount of money a company has in its bank account at a particular time: »The company reported a cash balance of £335m at the end of the second quarter. → See also TARGET CASH… … Financial and business terms
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