Days cash on hand is the primary liquidity measure for hospitals and health systems, and a standard covenant in bond indentures and HUD-insured loans. Enter unrestricted cash and operating expenses to measure liquidity and covenant headroom.
How it works
Measure how many days a hospital or health system could cover cash operating expenses with unrestricted cash, and test the result against a debt covenant.
Daily cash operating expense = (Operating expenses − Depreciation & amortization) ÷ Days in period
Days cash on hand = Unrestricted cash & investments ÷ Daily cash operating expenseCommon uses
- Debt covenant compliance testing
- Board and finance committee reporting
- Liquidity planning and rating agency preparation
Worked example
The calculator above opens with this example. Change any input to see the results update instantly, or select Reset to return to these figures.
| Unrestricted cash & investments | $38,500,000 |
| Total operating expenses (period) | $182,000,000 |
| Depreciation & amortization (period) | $9,800,000 |
| Days in period | 365 |
| Covenant minimum | 60 days |
| Days cash on hand | 81.6 days |
| Daily cash operating expense | $471,781 |
| Cushion vs. covenant | 21.6 days |
| Cash above covenant | $10,193,151 |
| Each $1M of cash adds | 2.1 days |
In compliance with the 60-day covenant.
Interpreting the results
- Confirm the covenant definition in your loan or bond documents: some include board-designated funds or exclude certain expenses.
- Rating agencies compare DCOH against peers by rating category; trend matters as much as the level.
- Use trailing-twelve-month expenses for a stable denominator; a single month can distort the result.
Frequently asked questions
How is days cash on hand calculated?
Days cash on hand equals unrestricted cash and investments divided by daily cash operating expenses. Daily cash operating expense is total operating expense less depreciation and amortization, divided by the days in the period.
Why is depreciation excluded?
Depreciation and amortization are non-cash expenses. Excluding them measures how long cash would cover the expenses that actually require cash payment.
What cash counts as unrestricted?
Use cash and investments the organization can spend on operations without restriction, often including board-designated funds. Covenant definitions vary, so always follow the specific definition in your loan or bond documents.
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