Above this required amount is excess cash, i.e., cash the business does not need for normal operations. While it is impossible to draw a precise line between required and excess cash, it is plain that at some point, cash balances can accumulate far above this admittedly fuzzy threshold. Excess cash for which there is no immediate need is often invested in marketable securities, but they pose the question of accountability in measuring assets and their returns.

The delineation between required and excess cash marks the border between treasury and capital budgeting functions. It is important to draw that line correctly in managerial reporting so as to encourage a clean separation of financing and operations in decision making.