Posted in Finance, Accounting and Economics Terms, Total Reads: 51
Definition: Cash In Hand
Cash in hand is the total amount of assets which can be immediately convertible into cash. This include petty cash, cash in bank accounts, cash through marketable securities. Cash-in-hand does not include assets which must be sold to generate cash.
For any business to perform its day-to-day activities, it needs certain amount of cash which is easily and immediately available. It includes petty cash, which is the amount of cash kept in hands to address small needs for which we do not want to withdraw from bank or write check. The amount of cash-in-hand needed changes from industry to industry. The amount of cash-in-hand determines many things for a company. It determines whether the company is ready to undertake any new projects or not, whether the company needs to take debt, whether the company can absorb any sudden financial needs. It also gives us an indication if the company is going into bankruptcy.
In a company's balance sheet cash-in-hand is included in the asset side in current asset section. It would be in the top most field in the asset side, since it is the most liquefiable asset. The amount of cash-in-hand must also be know to generate cash flow statement for a company that shows changes in flow of cash.