1. What is Days Cash on Hand?

Days Cash on Hand is a financial metric that measures how many days a business can continue to pay its operating expenses using its available cash reserves. It's a key indicator of financial health and liquidity.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Cash \) — Total available cash reserves (in dollars)
• \( Daily\ Operating\ Expenses \) — Average daily operating costs (in dollars)

Explanation: The formula divides the total cash by the daily operating expenses to determine how many days the business could operate without additional income.

3. Importance of Days Cash on Hand

Details: This metric is crucial for financial planning, especially for startups and businesses with variable income. It helps assess financial resilience and plan for cash flow challenges.

4. Using the Calculator

Tips: Enter your total cash reserves and average daily operating expenses in dollars. Both values must be positive numbers, with daily expenses greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Days Cash on Hand value?
A: Typically, 30-90 days is considered healthy, but this varies by industry. Businesses with more predictable income can operate with less.

Q2: Should I include accounts receivable in cash?
A: No, this calculation should only include liquid assets that can immediately cover expenses.

Q3: How do I calculate daily operating expenses?
A: Take your monthly operating expenses and divide by 30 (or annual expenses divided by 365).

Q4: Does this include non-cash expenses like depreciation?
A: No, only include expenses that actually require cash outlays.

Q5: How often should I calculate this metric?
A: For best financial management, calculate it monthly or quarterly to monitor trends.