The Days of Cash on Hand Calculator helps businesses, non-profits, and financial analysts determine how many days an organization can continue operating using only its available cash and liquid assets.
This financial metric is crucial for:
- Businesses – Evaluating cash reserves and financial health.
- Nonprofits – Ensuring operational sustainability without relying on new funding.
- Healthcare Facilities – Managing cash flow to sustain daily operations.
- Government Entities – Planning for contingencies and budgeting efficiently.
A higher Days of Cash on Hand value means greater financial stability, while a lower value indicates a higher risk of cash shortages.
Formula for Days Of Cash On Hand Calculator
The formula to calculate Days of Cash on Hand is:
Days of Cash on Hand =
(Cash & Cash Equivalents) / (Daily Operating Expenses)
Where:
- Cash & Cash Equivalents = Total available cash, including short-term liquid assets like savings and money market funds.
- Daily Operating Expenses =
(Total Operating Expenses - Non-Cash Expenses) / Number of Days
This removes non-cash expenses like depreciation to focus only on cash-related costs.
Days of Cash on Hand Reference Table
This table provides typical cash-on-hand benchmarks for different industries:
| Industry | Recommended Days of Cash on Hand |
|---|---|
| Large Corporations | 30 – 90 Days |
| Small Businesses | 15 – 45 Days |
| Nonprofits | 90 – 180 Days |
| Hospitals & Healthcare | 50 – 150 Days |
| Government Agencies | 60 – 180 Days |
Example of Days Of Cash On Hand Calculator
Scenario: Determining a Company’s Cash Reserves Duration
A business has:
- $500,000 in cash and cash equivalents.
- $3,000,000 in total annual operating expenses.
- $200,000 in non-cash expenses (e.g., depreciation).
Step 1: Calculate Daily Operating Expenses
Annual cash-based operating expenses = $3,000,000 - $200,000 = $2,800,000
Daily operating expenses = $2,800,000 ÷ 365 = $7,671.23
Step 2: Apply the Formula
Days of Cash on Hand = $500,000 ÷ $7,671.23 ≈ 65.1 Days
The company can sustain operations for 65 days without additional revenue or funding.
Most Common FAQs
A healthy range is 30-90 days for most businesses, though industries with volatile cash flows may aim for higher reserves.
Nonprofits and governments rely on external funding, so they often maintain 90+ days of cash on hand to cover operational needs between funding cycles.
Yes, but a low number (e.g., less than 15 days) indicates a high risk of financial strain, requiring better cash flow management or securing additional funding sources.