hidden reserve
Noun: A hidden reserve is an amount of value or assets that a company possesses but does not officially report on its balance sheet. These reserves are created by intentionally stating the value of assets lower than their true market worth or by overstating liabilities. The purpose is to strengthen the company's financial position discreetly, which can be used to smooth out profits or absorb future losses.
This term is used primarily in accounting, finance, and business contexts to describe undisclosed financial strength. - The company's strong performance was partly due to the release of a hidden reserve. - Auditors must be vigilant for the creation of hidden reserves, as they can misrepresent a firm's true financial health.
- Creating/ Building a hidden reserve: The act of establishing such a reserve.
- The conservative valuation of the property portfolio allowed the firm to build a hidden reserve.
- Drawing on/ Releasing a hidden reserve: The act of utilizing this concealed capital.
- During the economic downturn, the company drew on its hidden reserves to maintain dividend payments.
- Secret reserve: A direct synonym for hidden reserve.
- Undisclosed reserve: Another term with the same meaning.
- Balance sheet reserve: A broader term for any reserve listed on a balance sheet; a hidden reserve is specifically this.
- Off-balance-sheet item: A wider category that can include hidden reserves among other obligations or assets not recorded on the balance sheet.
- Undisclosed reserve
- Secret reserve
- Inner reserve (less common)
- Disclosed reserve
- Book reserve (a reserve that is formally recorded)
- Reported reserve
While there are no common idioms using "hidden reserve," the concept is related to the following business phrases: - "Cook the books": To manipulate financial records, which can include creating hidden reserves. - "Rainy day fund": An informal term for savings for future needs; a hidden reserve can serve a similar but undisclosed purpose for a corporation.
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reserves that do not show up on the balance sheet (as by understating values)
