Chapter Fifteen

Managing Operating Cash and Investments

THIS CHAPTER OUTLINES THE USES of cash available to the company. There are different cash levels, and each has its own utility and purpose, based on which investment themes can be outlined. We discuss the management of operating cash and of investments beyond the immediate horizon, highlighting key principles and practices that could be of use while formulating tactics and strategies for the same.


Cash on the balance sheet can be divided by the Treasurer, based on need and longevity of expected stay on the balance sheet. The different elements of cash on the balance sheet are delineated in Figure 15.1.

FIGURE 15.1 Different Elements of Cash


From the cash available for use to the firm, the various elements are:

  • Strategic or business cash
  • Restricted cash
  • Reserve cash
  • Operating cash

Strategic or business cash is the long-term cash that is being kept for a specific purpose, such as an acquisition or capital payment. Here we assume that the cash that is not going to be required for an identified purpose or incident will be returned to the shareholders from the strategic or business cash.

Restricted cash is the cash that is in a particular location for a reason—say to support a financial transaction for the business (such as collateral) or as a consequence of doing business in a country (trapped cash). ...

Get The Handbook of Global Corporate Treasury now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.