Unrestricted Cash

Unrestricted cash as the name suggests is the cash that is not associated or tied to a particular use within or outside the business entity. Unrestricted cash is not restricted to any particular purpose and it is taken as an instant reservoir of the cash that can be used for the sudden monetary requirements for the business entity. The unrestricted cash is extremely liquid that is why it can be use readily for any purpose when required. The major purpose of the unrestricted cash is to satisfy the debt covenants as most of the business entities need to keep and show a stable amount of money or financial reserve in their balance sheets. So in other words it can also be defined as that any amount in a business entity that exceeds the requirement of the business entity is termed as unrestricted cash.

The unrestricted cash is an essential part of the liquid fund of an organization as we know that the liquid fund of an organization consists of cash, unrestricted cash, short term investments, cash equivalents, unrestricted short term investments, and the short term borrowing capacity of a business entity.

As unrestricted cash comes under the category of cash and cash equivalent so it is readily available for a business entity whenever the entity is in need of cash or is suffering from the shortage of the cash. Thus unrestricted cash is the form of the asset that is always in access of the entity when needed to be liquefied.

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