Days of Operating Cash on Hand — get_days_cash

Measures how many days an organization can operate using available liquid assets.

Formula:

doch = liquid_assets / daily_expenses

liquid_assets = cash + savings + pledges_receivable + accounts_receivable
daily_expenses = ( total_expenses - depreciation ) / 365

Definitional Range

Bounded below at zero and unbounded above, expressed in days. The typical range for nonprofits is approximately [0, 365]. Values above 365 (more than one year of cash) indicate very large liquid reserves relative to expenses, which is uncommon for operating nonprofits but typical for foundations.

Benchmarks and rules of thumb

Below 30 days: Generally considered a distress indicator.
60-90 days: Commonly cited minimum threshold (Nonprofit Finance Fund).
90-180 days: Considered healthy for most operating nonprofits.
Healthcare nonprofits are typically benchmarked at 150+ days due to longer receivables cycles.

Calculated For: 990 + 990EZ filers.

Usage

get_days_cash_operations( df,
  cash                = "F9_10_ASSET_CASH_EOY",
  savings             = "F9_10_ASSET_SAVING_EOY",
  pledges_receivable  = "F9_10_ASSET_PLEDGE_NET_EOY",
  accounts_receivable = "F9_10_ASSET_ACC_NET_EOY",
  total_expenses      = "F9_09_EXP_TOT_TOT",
  depreciation        = "F9_09_EXP_DEPREC_TOT",
  numerator = NULL, denominator = NULL, 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.
pledges_receivable: Net pledges and grants receivable, EOY.
accounts_receivable: Accounts receivable, net, EOY.
total_expenses: Total functional expenses.
depreciation: Depreciation, depletion, and amortization.
numerator: Optional. A pre-aggregated column name for liquid assets. Cannot be combined with the individual asset arguments.
denominator: Optional. A pre-aggregated column name for annual non-depreciation expenses (the function divides this by 365 internally). Cannot be combined with total_expenses or depreciation.
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:

- `days_cash_ops`   - days of operating cash on hand (raw)
- `days_cash_ops_w` - winsorized version
- `days_cash_ops_z` - standardized z-score (based on winsorized values)
- `days_cash_ops_p` - percentile rank (1-100)

Details

Primary uses and key insights

Days of cash on hand expresses liquidity in an operationally intuitive unit: how many days of expenses could the organization cover if all revenue stopped today? It converts the raw dollar amount of liquid assets into a time-based runway measure that is easier for non-financial audiences (boards, program staff, funders) to interpret than a ratio. It is widely used in nonprofit financial management, healthcare finance, and government financial reporting.

Formula variations and their sources

The denominator in this implementation is cash operating expenses per day, computed as (total expenses - depreciation) / 365. Depreciation is subtracted because it is a non-cash charge that does not represent actual cash outflow. Some formulations use total expenses without the depreciation adjustment, which is more conservative (produces lower days values). The monthly equivalent is get_months_cash_operations(), which uses /12 instead of /365.

The numerator includes cash, savings, pledges receivable, and accounts receivable - the same four items used in the quick ratio (get_quick_ratio()). Some stricter formulations use only cash and savings (excluding receivables); some broader ones add investments held for sale. The four-item version follows the Healthcare Financial Management Association (HFMA) standard, which is the most commonly cited benchmark source.

Why this formula was chosen

The HFMA definition is the most widely benchmarked version and is increasingly applied to nonprofits outside healthcare. Subtracting depreciation from the denominator follows standard financial management practice (Zietlow et al. 2007) because the ratio is intended to measure cash coverage of cash expenses.

Canonical citations

Healthcare Financial Management Association (HFMA). Key Hospital Financial Statistics and Ratio Medians. Annual report. - Source for the most widely cited days-of-cash benchmarks; originally healthcare-focused but increasingly applied to nonprofits broadly.
Zietlow, J., Hankin, J.A. & Seidner, A. (2007). Financial Management for Nonprofit Organizations. Wiley. - Adopts the HFMA approach for nonprofits.
Tuckman, H.P. & Chang, C.F. (1991). A methodology for measuring the financial vulnerability of charitable nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 20(4), 445-460.

Variables used:

F9_10_ASSET_CASH_EOY: Cash on hand (cash)
F9_10_ASSET_SAVING_EOY: Savings (savings)
F9_10_ASSET_PLEDGE_NET_EOY: Net pledges receivable (pledges_receivable)
F9_10_ASSET_ACC_NET_EOY: Accounts receivable (accounts_receivable)
F9_09_EXP_TOT_TOT: Total functional expenses (total_expenses)
F9_09_EXP_DEPREC_TOT: Depreciation and amortization (depreciation)

Examples

library( fiscal )
data( dat10k )

d <- get_days_cash_operations( df = dat10k )
#>    :: Daily operating expenses equal to zero :: 86 case(s) replaced with NaN
head( d[ , c( "days_cash_ops", "days_cash_ops_w", "days_cash_ops_z", "days_cash_ops_p" ) ] )
#>    days_cash_ops days_cash_ops_w days_cash_ops_z days_cash_ops_p
#>            <num>           <num>           <num>           <int>
#> 1:            NA              NA              NA              NA
#> 2:     117.52473       117.52473      -0.5717118              28
#> 3:     500.79359       500.79359       0.7976926              74
#> 4:            NA              NA              NA              NA
#> 5:      47.60375        47.60375      -0.9414216              12
#> 6:            NA              NA              NA              NA