Restricted cash

Restricted cash is money a company holds but cannot freely use, because it is set aside for a specific purpose. Common examples are cash held as collateral for a loan, deposits required by a lease or contract, or funds reserved to repay a particular debt.

Companies usually report it on a separate line from cash and equivalents, as a current or noncurrent asset depending on when the restriction ends.

When measuring how much cash a company has available, leave restricted cash out. A balance sheet can look cash rich while a large part of that cash is committed elsewhere, so check the notes for what the restriction covers and when it lifts.