Cash reserves refer to the amount of liquid assets that a company or individual keeps on hand to meet short-term obligations. These reserves are crucial for managing unexpected expenses, ensuring operational stability, and providing a buffer during economic downturns. They can be held in various forms, such as cash in bank accounts or easily accessible investments. Maintaining adequate cash reserves allows businesses to seize opportunities, like investing in new projects or covering payroll during lean periods. For individuals, having cash reserves can help manage emergencies, such as medical expenses or job loss, without resorting to debt or high-interest loans.