Plain definition
Available cash is a management view of the cash the company can use after allowing for restrictions and scheduled commitments.
Available cash = reported cash and cash equivalents − restricted or pledged cash − commitments due within the chosen period
Available cash is not a separate balance defined by IAS 7. Management should state the calculation policy, reporting date, and period used for commitments.
Worked example
Monetary examples use Saudi riyals (SAR). The same principles apply in other currencies.
A company reports cash and cash equivalents of . Of that amount, is restricted and is committed for payment during the next 30 days.
| Reported cash and cash equivalents | |
|---|---|
| Restricted cash | |
| Scheduled commitments | |
| Available cash |
A proposed project costs . It appears affordable against reported cash, but it exceeds available cash by .
Why it matters
Reported cash tells the reader what was recorded at a particular date.
Available cash shows what can support a new decision without consuming funds needed for another purpose.
Confusing the two can make a proposed use of cash look funded when it would leave the company unable to meet scheduled obligations.
Practical consequence
Recalculate available cash weekly using a consistent period, such as the next 30 days.
Reconcile bank balances and commitments, and show restricted cash separately.
Do not add unused borrowing facilities to cash.
If you include a committed, undrawn facility that is currently drawable, call the result available liquidity—not available cash.
Try your own numbers
Map expected cash in and out week by week, then see the lowest point before it arrives.
13-week cash-flow forecast