What is Cash on Hand?
Cash on Hand Definition
Cash on Hand refers to the amount of cash that a person or organization has in their possession, or readily available in their financial accounts, as of a given moment. This includes physical currency, as well as any funds in checking or savings accounts. It is an important metric in assessing an entity's financial health and liquidity as it can be used to pay bills, expenses, debts, and investments.
In accounting terms, Cash on Hand is considered a current asset and is typically classified on a company’s balance sheet. It is often used as an indicator of an organisation's ability to meet its short-term obligations and expenses. Companies with a high level of cash on hand are generally seen as financially sound and equipped to handle unexpected events or emergencies.
Cash on Hand can come from various sources, such as sales revenue, loans, investments, or donations. It is important for businesses to maintain an appropriate level of cash on hand to avoid cash flow problems and to have funds available for unexpected expenses.
Cash on Hand should not be confused with Cash Flow. Cash Flow refers to the movement of cash in and out of a business over a specific period, while Cash on Hand refers to the amount of cash available at a specific point in time.
Cash on Hand can also be referred to as "petty cash" or "float". This represents a small amount of cash that is kept on hand for routine expenses or emergency purposes such as keeping small changes for daily transactions like purchasing office supplies, paying for a taxi, etc.
In personal finance, Cash on Hand is often referred to as "liquid cash". It is the cash or cash equivalents that a person has readily available that can be used to cover their day-to-day expenses, obligations, or investments.
Cash on Hand can be affected by a variety of factors, including economic conditions, business performance, interest rates, inflation, and currency fluctuations. Some businesses and individuals may choose to invest their cash on hand to earn interest or other returns, while others may keep it in low-risk, highly liquid investments to ensure its availability at all times.
