Days Cash on Hand Calculation
This Days Cash on Hand (DCOH) metric shows the estimated number of days that your company can pay for its operating expenses. A higher DCOH means a lower risk for your company.
NetSuite calculates the annual Days Cash on Hand using the following formula:
|
Days Cash on Hand (DCOH) |
= |
(Bank Balance +Other Current Asset)/ (Operating Expense/Number of Days) |
The number of days in a year has 365 days but 366 in a leap year. The calculation for DCOH uses either 365 or 366 depending on the applicable length of a given year.
For example, Company A has $150,000 cash on hand with additional $5,000 other current asset. Their yearly operating expense is $60,000. To determine the number of days estimated to fund or pay for its operation, the DCOH is calculated as:
|
Days Cash on Hand (DCOH) |
= |
$150, 000+$5,000/ ($60, 000/366) |
|
|
= |
$155, 000/ $163.93 |
|
|
= |
945.52 |