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What exactly is meant by cash days or days cash on hand and how do you calculate it?

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تم إضافة السؤال من قبل SAI ANIMESH KUMAR N , Senior Manager, Credit , Ahli United Bank
تاريخ النشر: 2016/03/27
Ashwani Giri
من قبل Ashwani Giri , Associate VP - Data Governance , JP Morgan Chase

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. Managers should be aware of the days cash on hand in the following circumstances (a). When a business is starting up, and is not yet generating any cash from sales (b).During the low part of a seasonal sales cycle, when there may be no sales. (C).During a transition to a new product line, when sales of the old product line are poor and declining.

One interpretation of Days of Cash is that it is the number of days you can stay in business if you don’t make any more sales or collect any more money from customers.  

The simple definition is to take your ending cash balance and divide by daily cash operating expenses (Total Operating Expenses less Depreciation and Amortization). 

Cash is really cash and cash equivalents – stuff you can use to pay your bills.  So it includes your bank account and short term investments that can be converted to cash quickly. Daily cash operating expenses are calculated differently depending on the time frame you are looking at.

Vinod Jetley
من قبل Vinod Jetley , Assistant General Manager , State Bank of India

has annual operating expenses of $730,000, divide $730,000 by 365 to find the daily operating expenses equal $2,000. Divide the cash and cash equivalents on hand total by the daily operating costs to find the days cash on hand

Mohammad Ashi CFA CMA
من قبل Mohammad Ashi CFA CMA , Group Finance Manager , QOAD

i agree with answers

thank you

حسين محمد ياسين
من قبل حسين محمد ياسين , Finance Manager , مؤسسة عبد الماجد محمد العمر للمقاولات العامة

agree with answers .........................................

Ahmed Mohamed Ayesh Sarkhi
من قبل Ahmed Mohamed Ayesh Sarkhi , Shared Services Supervisor , Saudi Musheera Co. Ltd.

full agree with mr. Ashwani Giri 

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