Gary Bode, CPA: your QuickBooks bookkeeping should help build managerial tools like the Fortune 500 companies use
QuickBooks bookkeeping can be used to build powerful managerial tools. Hi, I’m Gary Bode, a CPA here in Wilmington NC. Hard work goes into your QuickBooks 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 comapnies develop as part of a monthly performance dashboard. Days Cash on Hand is an “alarm” type of tool.
“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, CPA Wilmington NC
QuickBooks trainer
Generally, a company should have at least 90 days of operating cash available. Why? Because if the company’s revenue suddenly declines, it takes a CPA 90 days to develop and implement a turnaround plan.
Days Cash on Hand = (Cash + Investments + Available Lines of Credit) / Average Daily Operating Expenses
If this drops below 90, it 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. Remember this is just one monthly tool and would be a part of a performance dashboard.
If your CPA just uses your QuickBooks bookkeeping and accounting for income tax preparation, please consider giving us a call at (910) 399-2705. We’re a Wilmington NC CPA firm that believes your QuickBooks bookkeeping should also be used to build tools top companies for managerial decisions.
