Days of Cash on Hand Calculator

Formula

The formula to calculate the Days of Cash on Hand (D) is:

$\text{D} = \left(\frac{\text{C}}{\text{E}}\right) \times \text{N}$

Where:

D – The days of cash on hand.
C – The cash and cash equivalents.
E – The operating expenses.
N – The number of days in the period.

Definition

Days of Cash on Hand (D): The number of days a company can continue to pay its operating expenses using its available cash and cash equivalents.
Cash and Cash Equivalents (C): The total amount of cash and liquid assets available.
Operating Expenses (E): The total expenses incurred in the normal operations of the business.
Number of Days in the Period (N): The duration of the period in days.

Example

Let's say the cash and cash equivalents (C) are $50,000, the operating expenses (E) are $5,000, and the number of days in the period (N) is 30. Using the formula:

$\text{D} = \left(\frac{50,000}{5,000}\right) \times 30 = 10 \times 30 = 300$

So, the days of cash on hand is 300 days.

Extended information about "Days-of-Cash-on-Hand-Calculator"

Days Cash on Hand Calculation Formula

Definition: Days cash on hand is the number of days that an organization can continue to pay its operating expenses, given the amount of cash available.

Formula: $\text{Days Cash on Hand} = \frac{\text{Cash on Hand}}{\left( \frac{\text{Annual Operating Expense} - \text{Non-Cash Items}}{365} \right)}$

Cash on Hand: \$200,000
Annual Operating Expense: \$800,000
Non-Cash Items: \$40,000

Example: $\text{Days Cash on Hand} = \frac{200,000}{\left( \frac{800,000 - 40,000}{365} \right)}$

Number of Days of Cash on Hand

Definition: The number of days of cash on hand indicates how long a company can cover its operating expenses with the cash it currently has.

Formula: $\text{Days of Cash on Hand} = \frac{\text{Cash on Hand}}{\left( \frac{\text{Operating Expenses} - \text{Depreciation}}{365} \right)}$

Cash on Hand: \$150,000
Operating Expenses: \$600,000
Depreciation: \$30,000

Example: $\text{Days of Cash on Hand} = \frac{150,000}{\left( \frac{600,000 - 30,000}{365} \right)}$

Calculate Days Cash on Hand Ratio

Definition: The days cash on hand ratio measures the liquidity of a company by calculating the number of days it can continue to pay its operating expenses with the cash available.

Formula: $\text{Days Cash on Hand Ratio} = \frac{\text{Cash Available}}{\left( \frac{\text{Annual Expenses} - \text{Non-Cash Expenses}}{365} \right)}$

Cash Available: \$250,000
Annual Expenses: \$900,000
Non-Cash Expenses: \$50,000

Example: $\text{Days Cash on Hand Ratio} = \frac{250,000}{\left( \frac{900,000 - 50,000}{365} \right)}$