What does the 'days cash on hand' metric measure in hospital finance?

• A. The number of days current cash would cover operating expenses.
• B. The number of days to collect receivables.
• C. The number of days to pay accounts payable.
• D. The number of days to depreciation.

Answer: (A)

Days cash on hand shows how many days a hospital could operate using only the cash and cash equivalents it currently has. It gauges short‑term liquidity by asking: how long would operating expenses be covered if incoming cash stopped? The typical calculation is cash and cash equivalents (plus short‑term investments in some models) divided by average daily operating expenses (often annual operating expenses divided by 365). A larger number means stronger immediate liquidity; a smaller number signals greater risk of cash shortfalls.

This metric isn’t about how quickly receivables are collected, nor how long it takes to pay suppliers, nor about depreciation. Those are different concepts: receivables days looks at cash inflows timing, days payable looks at cash outflow timing to vendors, and depreciation is a non-cash accounting expense.