Trapped cash: Difference between revisions
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imported>Doug Williamson (Create the page. Source: MCT reading 2 - 2.3.1, page 14.) |
imported>Doug Williamson (Classify page.) |
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Cash to which access is limited, particularly in the case of non-domestic subsidiaries and joint ventures. | Cash to which access is limited, particularly in the case of non-domestic subsidiaries and joint ventures. | ||
Cash can be trapped by exchange controls, tax, accounting, legal | Cash can be trapped by exchange controls, tax, accounting, legal, lender or other restrictions. | ||
Depreciation of fixed assets reduces the distributable profit, thereby increasing trapped cash balances, especially acute in project companies with a finite life. | Depreciation of fixed assets reduces the distributable profit, thereby increasing trapped cash balances, especially acute in project companies with a finite life. | ||
Bank cover ratios and tax laws which prohibit full distribution have a similar effect. | Bank cover ratios and tax laws which prohibit full distribution have a similar cash-trapping effect. | ||
== See also == | == See also == | ||
*[[ | *[[Cover ratio]] | ||
*[[Depreciation]] | *[[Depreciation]] | ||
*[[Distributable reserves]] | *[[Distributable reserves]] | ||
*[[ | *[[Exchange controls]] | ||
*[[Idle cash]] | |||
*[[Joint venture]] | |||
*[[Subsidiary]] | |||
[[Category:The_business_context]] | |||
[[Category:Cash_management]] | |||
[[Category:Liquidity_management]] | |||
Latest revision as of 06:54, 1 April 2022
Cash to which access is limited, particularly in the case of non-domestic subsidiaries and joint ventures.
Cash can be trapped by exchange controls, tax, accounting, legal, lender or other restrictions.
Depreciation of fixed assets reduces the distributable profit, thereby increasing trapped cash balances, especially acute in project companies with a finite life.
Bank cover ratios and tax laws which prohibit full distribution have a similar cash-trapping effect.
