Cash and Cash Equivalents
Cash on hand, bank balances and short-term highly liquid investments readily convertible to a known amount of cash.
Formula
Test: the instrument matures within three months of acquisition and carries insignificant risk of change in value
Unit
₹ crore
In depth
Not all cash on a balance sheet is available: balances pledged against borrowings, held in escrow, or lying in overseas subsidiaries subject to repatriation costs are restricted, and the notes disclose which. A company reporting large cash alongside large debt is often not being inefficient but is unable to use that cash to repay. Net debt, computed as borrowings minus cash, is the figure that matters for leverage, and enterprise value uses it for the same reason. Treating the headline cash line as freely available for dividends or buybacks is a routine mistake.
Worked example
Cash of ₹300 crore against borrowings of ₹800 crore gives net debt of ₹500 crore. If ₹180 crore of that cash is pledged as margin against those borrowings, the freely usable balance is ₹120 crore.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Cash and Cash Equivalents” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.