Definition
Days cash on hand estimates how long cash can cover operating expenses without new inflows.
Formula
Days cash on hand = cash balance / (operating expenses per day)
Example
Cash $900k and expenses $12k per day gives 75 days of cash on hand.
How to use it
- Use it with runway to communicate liquidity to stakeholders.
- Update frequently during periods of rapid burn changes.
Common mistakes
- Using revenue instead of expenses in the denominator.
- Ignoring seasonal expense spikes in the calculation.
Measured as
Days cash on hand = cash balance / (operating expenses per day)
Misused when
- Using revenue instead of expenses in the denominator.
- Ignoring seasonal expense spikes in the calculation.
Operator takeaway
- Use it with runway to communicate liquidity to stakeholders.
- Update frequently during periods of rapid burn changes.
- Tie Days Cash on Hand to the same balance-sheet date, scenario, and decision memo you are using elsewhere in the model.
- Document which claims, costs, or adjustments your team includes before comparing numbers across forecasts, covenants, or valuation work.
Next decision
- Read Cash runway: how to estimate burn, break-even, and survival time if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
- Decide whether Days Cash on Hand belongs in cash planning, valuation, or debt monitoring so the number is used in the right model.
Where to use this on MetricKit
Guides
- Cash runway: how to estimate burn, break-even, and survival time: A practical guide to runway: net burn, gross profit, break-even revenue, and how to avoid common cash planning mistakes.
- Runway and burn: gross vs net burn, working capital, and cash levers: A practical guide to runway: compute net burn, understand why cash differs from profit, and how working capital and collections change runway.