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 pay its operating expenses using its available cash reserves without additional cash inflows.

2. How Does the Calculator Work?

The calculator uses the Days Cash On Hand formula:

Where:

• \( Cash \) — Total available cash reserves
• \( Operating\ Expenses \) — Daily operating expenses
• \( 365 \) — Number of days in a year

Explanation: This formula calculates the number of days an organization can operate using its current cash reserves if no additional revenue is generated.

3. Importance of Days Cash On Hand Calculation

Details: This metric is crucial for financial planning, assessing liquidity risk, and determining an organization's ability to weather financial challenges without external funding.

4. Using the Calculator

Tips: Enter cash amount in dollars and daily operating expenses in dollars per day. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

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

Q2: Should I use annual or monthly operating expenses?
A: The calculator requires daily operating expenses. Divide your monthly expenses by 30 or annual expenses by 365 to get the daily amount.

Q3: Does this include all cash equivalents?
A: For the most accurate calculation, include all liquid assets that can be quickly converted to cash, not just physical cash.

Q4: How often should this calculation be performed?
A: It's recommended to calculate this metric monthly as part of regular financial reporting and monitoring.

Q5: What if my operating expenses fluctuate significantly?
A: Use an average of your operating expenses over a relevant period (e.g., 3-6 months) for a more accurate calculation.