Capital Reserve
A capital reserve is a financial buffer derived from profits, typically set aside for future investments, unforeseen expenses, or debt repayment. This reserve strengthens a company’s financial stability by providing a safety net for long-term capital projects or emergencies. Capital reserves are particularly crucial for ensuring a business can handle economic downturns or capitalize on strategic opportunities.
Key Takeaways
- Reserve set aside from profits for long-term needs.
- Used for investments, emergencies, or debt repayment.
- Strengthens financial stability.
- Crucial for strategic opportunities or downturns.
