For companies, a large cash position is often a powerful signal of financial strength, while a small cash position is a potential warning sign. This is because cash is needed to fund operations and to pay off obligations. However, too large of a cash position can often signal waste, as the funds are generating very little return.
A Bank is generally required to have a minimum cash position which is based upon the amount of funds it holds. This ensures that the bank has the ability to pay out its account holders if they demand funding. When an investment fund has a large cash position, it is often a sign that it sees few attractive investments in the market and is comfortable sitting on the sidelines.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
cash position — The percentage of a mutual fund s assets invested in short term reserves, such as US Treasury bills or other money market instruments. Bloomberg Financial Dictionary * * * cash position cash position ➔ position1 * * * … Financial and business terms
cash position — noun The amount of cash available to a company at a given point in time … Wiktionary
cash position — / kæʃ pəˌzɪʃ(ə)n/ noun a state of the cash which a company currently has available … Dictionary of banking and finance
cash position — Degree of liquidity; amount of quick or liquid assets … Black's law dictionary
cash position in Central Bank money — Balance in a central bank money account on a settlement platform operating the integrated settlement model. Also referred to as Liquidity position. Euroclear Clearing and Settlement glossary … Financial and business terms
cash position in Central Bank money — Balance in a central bank money account on a settlement platform operating the integrated settlement model. Also referred to as Liquidity position … Euroclear glossary
Position — A market commitment; the number of contracts bought or sold for which no offsetting transaction has been entered into. The buyer of a commodity is said to have a long position and the seller of a commodity is said to have a short position .… … Financial and business terms
position — A market commitment. A buyer of a futures contract is said to have a long position and, conversely, a seller of futures contracts is said to have a short position. Chicago Board of Trade glossary Open contracts indicating an interest in the… … Financial and business terms
Cash Flow From Investing Activities — An item on the cash flow statement that reports the aggregate change in a company s cash position resulting from any gains (or losses) from investments in the financial markets and operating subsidiaries, and changes resulting from amounts spent… … Investment dictionary
cash-and-carry arbitrage — ( carry arbitrage) A basis trade involving a long cash position exactly offset by a short futures position. The holder of the position believes that the futures contract is expensive. He shorts the future, borrows at money market rates to finance … Financial and business terms