Unrestricted Cash

Monetary reserves that are not tied to a particular use. Unrestricted cash represents instant reserves, as it can be used for any purpose and is extremely liquid. Often, in order to satisfy debt covenants, firms will have to maintain a certain level of cash on their balance sheets - the amount that exceeds the requirements is referred to as unrestricted cash.

An organization's liquid funds include cash, unrestricted cash, cash equivalents, unrestricted short-term (ST) investments, plus net short-term borrowing capacity.

Cash and cash equivalents represent the money that an organization can spend now, as they are assets readily available for use. In order to spend more than that, a company will have to take on a higher level of liabilities, such as through loans or accounts receivable. For some organizations with a varying pattern of cash flow, such as a non-profits, unrestricted cash can keep operations active even when funding sources dry up.