Restricted cash, in contrast to unrestricted cash freely available for a company to spend or invest, refers to money that is held for a specific purpose and therefore not available to the company for immediate or general business use. Restricted cash appears as a separate item from the cash and cash equivalents listing on a company’s balance sheet or other financial statement, and the reason for the cash being restricted is usually disclosed in the accompanying notes to financial statements. Cash can be restricted for a number of possible reasons, such as equipment purchases, other capital investments, or loan repayment.
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