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- Trapped cash describes cash earnings that are held overseas, either due to regulatory constraints or tax rates. As a company grows, it may establish subsidiaries in other countries and accumulate cash balances there.
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Aug 9, 2023 · Trapped cash describes cash earnings that are held overseas, either due to regulatory constraints or tax rates. As a company grows, it may establish subsidiaries in other countries and accumulate cash balances there.
The cash trap is a concept that underscores the importance of maintaining a healthy cash flow and efficient financial management. Businesses must vigilantly monitor their liquidity, manage working capital, and assess the impact of strategic decisions on their ability to access cash.
May 2, 2022 · The most common meaning of cash trap is in accounting. When companies spend more and absorb more money than they generate, they are known to be in a cash trap even though they may be able to show profits on paper.
Defining Trapped Cash. The phrase ‘trapped cash’ generally describes all cash not available for a corporate’s daily cash cycle, but has traditionally been known in the market as referring to the following two main categories:
Jun 30, 2024 · A liquidity trap is an adverse economic situation that can occur when consumers and investors hoard cash rather than spend or invest it even when interest rates are low, stymying efforts by...
Oct 1, 2017 · The authors provide practitioners with a clear definition of trapped cash, permanently reinvested earnings, and foreign cash. Trapped cash comprises cash and cash equivalents generated by foreign operations and held outside the United States because of repatriation tax concerns.
Feb 21, 2024 · Ultimately, investors should remember that holding some cash is always necessary. However, they should also recognize that too much cash can become a liability. Despite the comfort that cash can provide, the most prudent move would be to avoid the “cash trap” and step into risk markets.