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Cash on Hand

Source: R/get-cash-on-hand.R
get_cash_on_hand.Rd

Absolute dollar amount of cash and liquid savings held at end of year.

Formula:

coh = cash + savings

Definitional Range

Cash on hand is bounded below at zero (cannot be negative on a properly prepared balance sheet) and unbounded above. Unlike ratio measures, the scale is in dollars, so comparison across organizations of different sizes requires normalization. Use get_months_cash_operations() or get_days_cash_operations() for size-adjusted comparisons.

Benchmarks and rules of thumb

  • As an absolute measure, benchmarks depend on the organization's expense base. A common practitioner rule is at least 60-90 days of operating expenses in liquid cash.

  • The Nonprofit Finance Fund recommends a minimum of three months of operating expenses in accessible reserves.

Calculated For: 990 + 990EZ filers.

Usage

get_cash_on_hand( df,
  cash    = "F9_10_ASSET_CASH_EOY",
  savings = "F9_10_ASSET_SAVING_EOY",
  winsorize = 0.98 ,
  range     = "zp",
  sanitize  = TRUE,
  summarize = FALSE )

Arguments

df

A data.frame containing the fields required for computing the metric.

cash

Cash on hand, EOY.

savings

Short-term investments (savings), EOY.

winsorize

The winsorization value (between 0 and 1), defaults to 0.98, which winsorizes at the 1st and 99th percentiles.

range

Character string specifying the theoretical range of the ratio, used to set winsorization bounds. Default "zp". Options: "np" (negative to positive), "zp" (zero to positive), "zo" (zero to one), "nz" (negative to zero), or a custom "lo;hi" pair (e.g. "0;10").

sanitize

Logical (default TRUE). If TRUE, NA values in the financial input columns are imputed to zero before the ratio is computed, respecting form scope: Part X and VIII/IX fields (990 only) are imputed only for 990 filers; Part I summary fields (990 + 990EZ) are imputed for all filers. The returned dataframe always contains the original unmodified input columns.

summarize

Logical. If TRUE, prints a summary() of the results and plots density curves for all four output columns (raw, winsorized, z-score, percentile). Defaults to FALSE.

Value

Object of class data.frame: the original dataframe appended with four new columns:

- `cash_on_hand`   - cash on hand in dollars (raw)
- `cash_on_hand_w` - winsorized version
- `cash_on_hand_z` - standardized z-score (based on winsorized values)
- `cash_on_hand_p` - percentile rank (1-100)

Details

Primary uses and key insights

Cash on hand is a simple dollar-denominated liquidity measure rather than a ratio. It answers the most direct version of the liquidity question: how much immediately spendable money does the organization have right now? It is most useful for communicating financial position to non-technical audiences (boards, funders), for absolute comparison against known fixed costs (monthly payroll, rent), and as the numerator input for ratio-based measures such as months of cash (get_months_cash_operations()) and days of cash (get_days_cash_operations()).

Formula variations and their sources

Some practitioners define cash on hand as cash only (Part X line 1B), excluding savings. Others include marketable securities or investments held for sale. This implementation uses cash plus savings (lines 1B + 2B) as the most common definition in the nonprofit financial management literature (Zietlow et al. 2007), since savings accounts and money market funds are effectively as liquid as operating cash for most organizations.

Why this formula was chosen

Lines 1B (cash) and 2B (savings and temporary cash investments) are the two most reliably liquid items on the 990 balance sheet and are the least subject to valuation uncertainty. Pledges and receivables are excluded because their timing and collectibility are uncertain. This definition is consistent with the "cash and cash equivalents" concept in nonprofit financial management practice.

Canonical citations

  • Zietlow, J., Hankin, J.A. & Seidner, A. (2007). Financial Management for Nonprofit Organizations. Wiley. - Standard practitioner reference for cash management in nonprofits.

  • Calabrese, T.D. (2013). Running on empty: The operating reserves of U.S. nonprofit organizations. Nonprofit Management and Leadership, 23(3), 281-302. - Examines operating cash and reserves as components of financial sustainability.

Variables used:

  • F9_10_ASSET_CASH_EOY: Cash on hand, EOY (cash)

  • F9_10_ASSET_SAVING_EOY: Savings and temporary cash investments, EOY (savings)

Examples

library( fiscal )
data( dat10k )

d <- get_cash_on_hand( df = dat10k )
head( d[ , c( "cash_on_hand", "cash_on_hand_w", "cash_on_hand_z", "cash_on_hand_p" ) ] )
#>    cash_on_hand cash_on_hand_w cash_on_hand_z cash_on_hand_p
#>           <num>          <num>          <num>          <int>
#> 1:           NA             NA             NA             NA
#> 2:       272933         272933    0.002859422             50
#> 3:      7741497        7741497    3.297398111             96
#> 4:           NA             NA             NA             NA
#> 5:         7019           7019   -0.892455165              5
#> 6:           NA             NA             NA             NA