Cash reserves refer to the amount of cash that a company or individual has on hand, which is not currently being used for any specific purpose. This money can be kept in bank accounts, savings accounts, or other liquid assets and serves as a safety net for unforeseen expenses or emergencies. Having adequate cash reserves is important for financial stability and security, as it allows individuals and companies to weather unexpected events such as job loss, medical bills, or economic downturns without having to rely on credit or loans. In summary, cash reserves represent a buffer zone that can help mitigate risks and provide peace of mind in times of uncertainty.