What is target cash balance?
What is the Target Cash Balance. The target cash balance describes the ideal level 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…
What is the Target Cash Balance. The target cash balance describes the ideal level 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.Click to see full answer. Correspondingly, what is minimum cash balance?A minimum cash balance is a cash reserve kept on hand to offset any unplanned cash outflows. The use of a minimum cash balance means that a certain amount of cash is maintained in a bank account, rather than being invested elsewhere, used to pay down debt, or returned to investors as a dividend.Furthermore, how do you calculate cash balance? You get that by adding money received and subtracting money spent. Cash balance is the amount of money on hand. You get that by taking the previous month’s cash balance and adding this month’s cash flow to it — which means subtracting if the cash flow is negative. Also to know, what is optimum cash balance? A firm has to maintain optimum cash balance. Optimal cash balance is that cash balance where the firm’s opportunity cost equals to transaction cost and the total cost are minimum.What is cash balance in accounting?The amount of money in an account. It is calculated by adding the initial deposit to all subsequent deposits and then subtracting all disbursements. A positive net cash balance indicates that money is present and available in the account, while a negative one indicates that the account is overdrawn.
