How do companies build cash reserves for paying back bonds on their maturity date or to replace assets?

Hello,





Do companies actualy build cash reserves for the above ? Do they build up cash equivalent to the amortisation charges in the case of assets?





If so, where are these reserves shown? In the balance sheet? Under which denotation? Reserves?





How can one see if a company has enough money set aside to plan for such events?





Thanks!





|||The company can come up with the cash several different ways. The two most common ways are to pay the coupons and maturing bonds using profits of the company or issue new debt and use the money to pay for the retired debt.





The reserves are essentially shown on the balance sheet because they are assets and liabilities. Depending on the maturity date, it will be noted as current assets/liabilities or long term debt.





Reviewing the financial statements of the company would reveal whether there is enough to cover the debt. Look at debt ratios and current ratios to figure out how leveraged the company is. If the debt ratio is high and current ratio is low, the company may have over-extended itself.|||Many thanks

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