What does "trapped cash" refer to in the context of multinational corporations?

"Trapped cash" refers to funds that multinational corporations have accumulated in foreign subsidiaries but are unable to access or repatriate to their home country without incurring significant tax liabilities. This situation often arises from repatriation taxes that can be imposed when profits earned in foreign jurisdictions are transferred back to the parent company. As a result, companies may choose to keep these funds abroad for reinvestment in the local market or to avoid the tax costs associated with bringing the money back home.

The other choices do not accurately capture the concept of trapped cash. Cash with no legal implications abroad does not address the tax considerations that define trapped cash. Likewise, cash flows from foreign markets represent overall income generated from those operations rather than the specific context of funds being stuck due to tax implications. Excess inventory holding costs in international offices relate to operational inefficiencies rather than the financial strategy surrounding cash management and tax considerations.