A company's days' cash on hand is computed by dividing:
A) cash and short-term investments by daily cash operating expenses.
B) cash by total cash operating expenses.
C) cash, short-term investments, and accounts receivable by daily cash operating expenses.
D) average cash over the period by daily cash operating expenses.

Question

Quizplus · Accepted Answer

Days' cash on hand is a measure of an organization's liquidity, indicating the number of days it could continue to operate using its available cash and short-term investments without additional inflows of cash. This measure is calculated by dividing the company's cash and short-term investments by its daily cash operating expenses. Hence, option A is the correct choice.

A Company's Days' Cash on Hand Is Computed by Dividing