reserve

Definition

Resources, inventory, or funds deliberately kept back for future emergencies, strategic opportunities, or that inevitable moment when everything goes sideways. In business, it's the financial equivalent of keeping a spare tire in your trunk—boring until you desperately need it. Banks love reserves; accountants worship them; entrepreneurs pretend they have them.

Example Usage

The CFO maintained a cash reserve of three months' operating expenses, which the CEO eyed longingly every time a shiny new opportunity appeared.

Source: Common financial and accounting terminology

Related Terms

Advanced

Leveraged Buyout

Buying a company using mostly borrowed money, which is the corporate equivalent of buying a house with no money down except the house is a billion-dollar company. The acquired company often ends up paying for its own acquisition, like making someone pay for their own kidnapping ransom.

💰 Finance / Accounting

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Index Fund

A fund that buys every stock in an index because picking individual winners is apparently too hard even for professionals. It's the financial equivalent of ordering one of everything on the menu because you can't decide, and somehow it works better than almost every other strategy.

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Accrual Basis

The accounting method where you recognize revenue when earned and expenses when incurred, regardless of when cash actually changes hands. It's like claiming you're rich because people owe you money, even if you're currently broke.

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soft close

A preliminary month-end financial closing process that produces rough numbers quickly, allowing management to see how the month went before accountants spend weeks perfecting every accrual. It's the financial equivalent of a rough draft.

💰 Finance / Accounting

Advanced

subordinated

In finance, debt or claims that get paid last in the hierarchy of bankruptcy proceedings—basically the financial equivalent of standing at the back of the line. Subordinated debt holders only get paid after senior creditors are satisfied, making it riskier but typically offering higher returns. It's the 'you'll get yours if there's anything left' category of obligations.

💰 Finance / Accounting

Intermediate

days sales outstanding

The average number of days it takes to collect payment after a sale, abbreviated as DSO. It measures how long customers ignore your invoices before grudgingly paying—lower is better unless you enjoy running a free lending operation.

💰 Finance / Accounting

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