Cash Position

The amount of cash that a company, investment fund or bank has on its books at a specific point in time. The cash position is a sign of financial strength and liquidity. In addition to cash itself, it will often take into consideration highly liquid assets such as certificates of deposit, short-term government debt and other cash equivalents.

For companies, a large cash position is often a powerful signal of financial strength, while a small cash position is a potential warning sign. This is because cash is needed to fund operations and to pay off obligations. However, too large of a cash position can often signal waste, as the funds are generating very little return.

A Bank is generally required to have a minimum cash position which is based upon the amount of funds it holds. This ensures that the bank has the ability to pay out its account holders if they demand funding. When an investment fund has a large cash position, it is often a sign that it sees few attractive investments in the market and is comfortable sitting on the sidelines.