- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Excess Cash on Hand - Businesses
Posted on 3/11/15 at 1:10 pm
Posted on 3/11/15 at 1:10 pm
How much excess cash on hand would you say the average business has in its bank account. I know the answer to this question could vary greatly depending on the type of business, health of the business, etc. I am just curious to what everyones thoughts were.
Posted on 3/11/15 at 1:16 pm to TheDirty1
That's an extremely vague question that cannot be answered in any accurate manner. It could be between $5 and $500,000.
That's like asking what's in your personal account without knowing anything about your finances.
That's like asking what's in your personal account without knowing anything about your finances.
Posted on 3/11/15 at 1:41 pm to TheDirty1
How much of an emergency fund does the average family have? That's pretty much what you are asking.
I assume you are talking about cash on hand that's easily accessible and non-committed... for example, if you are saving money for something particular, that would not count.
I assume you are talking about cash on hand that's easily accessible and non-committed... for example, if you are saving money for something particular, that would not count.
Posted on 3/11/15 at 3:14 pm to TheDirty1
I measure financial condition relative to both the balance sheet and the income statement.
My non-expert opinion....
Cash Burn Rate = (Cash / Operating Expenses + Debt Service) x 365
At a minimum, it should be equal to the greater of 90 days or 3 x your average cash conversion cycle days.
Generally speaking, anything less represents liquidity risk, and anything more represents capital planning issues.
My non-expert opinion....
Cash Burn Rate = (Cash / Operating Expenses + Debt Service) x 365
At a minimum, it should be equal to the greater of 90 days or 3 x your average cash conversion cycle days.
Generally speaking, anything less represents liquidity risk, and anything more represents capital planning issues.
This post was edited on 3/11/15 at 3:15 pm
Posted on 3/12/15 at 6:32 am to TheDirty1
I'd say the biggest variable here is the type of business you're speaking. Lifestyle business (i.e. cash flow biz) vs. Venture business (high growth cash flow negative biz). The former probably has a decent amount of reserves, but will budget what it keeps on hand and what it distributes to members/shareholders based on yearly op ex budgets and cap ex budgets. To THF point, most financial officers will forecast liabilities month-month and will make sure they have enough liquidity on hand to pay them off as well as a healthy margin of error. Ventures business is way too unpredictable and at any point could be flush with cash and 12 months later only have 2-3 months of runway left on their books and in need of more money.
Of course, there are other scenarios than the above, but I'd guess those are the two main types of businesses out there.
Of course, there are other scenarios than the above, but I'd guess those are the two main types of businesses out there.
This post was edited on 3/12/15 at 6:36 am
Popular
Back to top
![logo](https://images.tigerdroppings.com/images/layout/TDIcon.jpg)