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Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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avatar"We first selected Gary Bode because of his familiarity with a creative financing scheme for our new small business.  During our time with Gary, his insights have helped us better structure our small businesses, save money, and learn to be better small business managers.  When it comes to small business accounting, a little hand-holding goes a long way."—Justin and Joelle LeBlanc

Ocracoke Coffee Co.
Ocracoke Coffee Co.

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QuickBooks CPA discusses the Days Cash on Hand Financial Ratio | Wilmington NC

QuickBooks CPA Wilmington NC

Gary Bode, CPA: your QuickBooks bookkeeping should be managerially useful. For a free phone consult call 399-2705.

Every QuickBooks CPA knows that hard work goes into your bookkeeping and accounting. Too often it is only used to interface with the IRS during income tax preparation. Here is an example of a tool Fortune 500 companies develop as part of a monthly performance dashboard. Days Cash on Hand is an “alarm” type of tool.

What is a Financial Ratio?

Two or more components, taken from the company’s accounting or Financial Statements, are compared to each other in the form of a ratio or percentage. Financial analysis uses dozens of standardized ratios. These can be benchmarked to past figures, other companies and entire industry segments.

“The Days Cash on Hand calculation indicates how long a company can continue to operate if its revenue was cut off. All components of the calculation are derived from the underlying QuickBooks bookkeeping.”
– Gary Bode, QuickBooks CPA Wilmington NC

Below 90  is an indication that the company’s liquidity could be jeopardized if revenue dropped suddenly. What is the ideal number? It depends. Too high implies less than optimal utilization of resources. If the company’s revenue suddenly declines, it usually takes a 90 days to develop and implement a turnaround plan. Remember the Days Cash on Hand is just one monthly tool and would be a part of a performance dashboard.

Days Cash on Hand = (Cash + Investments + Available Lines of Credit) / Average Daily Operating Expenses

I’m a QuickBooks CPA that believes your bookkeeping and accounting should help with managerial decisions. Our virtual office allows us to serve long distance and international clients; the physical office is in Wilmington NC. There are hundreds of postings on this site, many on QuickBooks bookkeeping, fraud, setup, training and managerial uses for QuickBooks. For a free initial phone consult, please call (910) 399-2705.

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