1. What is Days Cash On Hand?

Days Cash On Hand is a financial metric that measures how many days an organization can continue to operate using its available cash and cash equivalents without additional revenue. It's a key indicator of financial health and liquidity.

2. How Does the Calculator Work?

The calculator uses the Days Cash On Hand formula:

Where:

• \( Cash \) — Total cash available (currency)
• \( Equivalents \) — Cash equivalents (currency)
• \( Expenses \) — Annual operating expenses (currency)

Explanation: The formula calculates how many days an organization can cover its operating expenses with its current cash reserves.

3. Importance of Days Cash On Hand

Details: This metric is crucial for financial planning, risk assessment, and ensuring organizational sustainability. A higher number indicates better financial stability and ability to weather financial challenges.

4. Using the Calculator

Tips: Enter cash and cash equivalents in currency units, and annual operating expenses in currency units. All values must be valid (cash ≥ 0, equivalents ≥ 0, expenses > 0).

5. Frequently Asked Questions (FAQ)

Q1: What is considered a good Days Cash On Hand value?
A: This varies by industry and organization size, but generally 30-90 days is considered healthy for most organizations.

Q2: What are considered cash equivalents?
A: Cash equivalents are highly liquid investments that can be quickly converted to cash, such as treasury bills, money market funds, and short-term government bonds.

Q3: Should I use annual or monthly expenses?
A: The formula uses annual expenses. If you have monthly expenses, multiply by 12 to get annual expenses.

Q4: How often should this calculation be done?
A: It's recommended to calculate this metric quarterly or whenever there are significant changes in cash position or expenses.

Q5: What if my organization has seasonal expenses?
A: For organizations with seasonal variations, consider using an average of several years' expenses or calculate separately for different seasons.