What this calculator does
Days cash on hand converts a cash balance into a survival time. It answers the question a board actually asks in a crisis: if revenue stopped, how long could we keep operating on what we have.
Depreciation is excluded because it is not a cash cost. Removing $150,000 of non-cash charges from $1,800,000 of operating expenses leaves a daily cash burn of $4,520.55, so $400,000 of reserves covers 88.5 days, or nearly three months.
The formula
Non-cash charges are subtracted from annual operating expenses to give the genuine cash cost, which is divided by 365 for a daily figure. Cash reserves divided by that daily cost gives the number of days.
| Term | Meaning |
|---|---|
| Days cash on hand | How many days of cash operating costs the reserves would cover. |
| Non-cash charges | Depreciation and amortisation, which appear as expenses but consume no cash. |
| Daily cash operating cost | Annual cash expenses divided by 365. |
The inputs explained
| Field | What to enter |
|---|---|
| Cash & short-term investments ($) | Cash and short-term investments available. |
| Annual operating expenses ($) | Annual operating expenses, including the non-cash items. |
| Non-cash charges (depreciation & amortisation) ($) | Depreciation and amortisation included in those expenses. |
When to use it
Assessing financial resilience
Lenders, boards and regulators all use this as a liquidity benchmark.
Setting a cash reserve policy
Many organisations target a minimum number of days and manage cash against it.
Planning through a revenue interruption
The figure is exactly what is needed when modelling a period with no income.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How long would each cash balance last?
The same cost base with three levels of reserves.
| Cash reserves | Days cash on hand | Equivalent in months |
|---|---|---|
| $200k | 44.2 days | 1.5 months |
| $400k | 88.5 days | 2.9 months |
| $800k | 177.0 days | 5.8 months |
Questions
Why exclude depreciation?
Because no cash leaves the business for it. Including it would overstate the daily burn and understate how long the reserves would actually last, which defeats the purpose of the measure.
How many days should a business hold?
It varies by sector and by how predictable the income is. Three to six months is a common target for non-profits and service businesses; organisations with contracted, reliable revenue often hold less.
Should an undrawn credit facility count?
Not in the base figure, since facilities can be withdrawn precisely when they are most needed. It is worth reporting separately as additional liquidity rather than folding it into the cash balance.
How does this differ from a cash runway?
Runway usually accounts for revenue still coming in, giving net burn. Days cash on hand assumes a total stop, which is the more conservative and simpler assumption.
For the short-term buffer on the balance sheet, see the working capital calculator. For coverage ratios against liabilities, see the liquidity ratios calculator.