Introduction
Uber's balance sheet at the end of 2024 shows cash in several places: $5.9 billion of cash and cash equivalents, $0.5 billion of current restricted cash, $2.2 billion of noncurrent restricted cash, and billions more in short-term and restricted investments. Its cash flow statement adds the first three together to reach $8.6 billion. Which of those amounts a banker treats as available to shareholders changes the company's net debt by billions.
The distinctions come from accounting definitions. Cash equivalents are investments so close to cash that they are reported with it. Restricted cash is cash the company holds but cannot freely use. And within unrestricted cash, some amounts may still belong to others or be needed to run the business. Getting these right is a small piece of accounting with a large effect on equity value.
What Counts as Cash and Cash Equivalents
Cash means currency on hand and demand deposits, bank balances the company can withdraw at any time. Cash equivalents are defined in Accounting Standards Codification (ASC) 230, and Deloitte's roadmap on the definition of cash and cash equivalents summarizes the test: short-term, highly liquid investments that are readily convertible to known amounts of cash and so near maturity that changes in interest rates pose only an insignificant risk to their value. Generally only investments with original maturities of three months or less qualify, measured from when the company bought them, and typical examples are Treasury bills, commercial paper and money market funds.
- Cash equivalents
Short-term, highly liquid investments that are readily convertible into known amounts of cash and carry insignificant risk of changes in value, generally those with an original maturity of three months or less when acquired, such as Treasury bills, commercial paper and money market funds.
Investments that do not meet the test, such as a one-year certificate of deposit or a corporate bond bought with two years left to run, are reported as short-term investments or marketable securities. Companies also set their own policy on which qualifying investments to treat as cash equivalents, so two similar companies can draw the line slightly differently.
Restricted Cash
Restricted cash is cash a company holds but cannot use freely, because it is pledged as collateral, held in escrow, set aside under a loan agreement or limited by law. Uber's 2024 annual report explains that its restricted cash is pledged as security for letters of credit and collateral for certain insurance policies, and includes cash unavailable for immediate use due to legal or contractual restrictions. Restricted cash is classified as current or noncurrent depending on when the restriction is expected to lapse.
| Line item | Amount |
|---|---|
| Cash and cash equivalents | 5,893 |
| Restricted cash and cash equivalents, current | 545 |
| Restricted cash and cash equivalents, noncurrent | 2,172 |
| Cash, cash equivalents and restricted cash, cash flow statement | 8,610 |
| Short-term investments | 1,084 |
| Restricted investments | 7,019 |
The cash flow statement reconciles to the total of the first three lines. Short-term and restricted investments are separate balance sheet lines. Source: Uber 2024 Form 10-K.
On the cash flow statement, restricted cash is combined with cash and cash equivalents, so the statement explains the change in all three together and companies reconcile that total to the balance sheet lines. A transfer from unrestricted to restricted cash is therefore not a cash flow at all. Why the ending cash on the cash flow statement can exceed the balance sheet's cash line is part of how the three statements link.
What Bankers Treat as Available Cash
In the bridge from enterprise value to equity value, cash is deducted from debt, so every dollar treated as available cash adds a dollar to equity value. Bankers therefore look past the balance sheet captions to what the cash can actually do:
- Restricted cash: usually excluded, because it is pledged or legally limited, unless it is set aside to repay a liability already counted in debt.
- Funds held for others: Uber notes that its cash includes amounts collected on behalf of drivers and merchants but not yet remitted, which are owed to them and recorded as liabilities.
- Trapped cash: cash held in foreign subsidiaries that would incur tax or face legal limits if moved to the parent.
- Operating cash: the minimum balance a business needs for daily operations, such as cash in store registers or in transit.
The judgment over which cash counts is a valuation question, discussed in the Valuation guide's article on non-operating assets and excess cash. The accounting supplies the starting point: the cash, cash equivalents and restricted cash captions, the cash note that explains what each contains, and the liabilities that some of the cash is held against. Where these lines sit within the rest of the balance sheet is shown in how the balance sheet works.
