Minimum/Operating Cash
Hello Monkeys,
Ive been working on building models from scratch pulling from 10Ks. However I noticed that all of my reference models have an operating/minimum cash line item, usually either as a constant or as a % of Rev. I understand the point of this line item (Subtract it from excess cash in order to get available cash for debt pay-down), but how do you find this on the 10K?
Obviously it's not a line item, so is there some rule of thumb for estimating operating/minimum cash?
Thanks!
I’ve used 30 or 60 days worth of operating expenses as a simple method here.
To add:
Logic behind this is that you need cash on hand to help cover gaps in your cash conversion cycle. If you pay your vendors faster than you collect from your customers, you will need cash to cover the vendor payments until you can collect on your sales.
The 30 to 60 days of operating expenses as a simple method is because most vendors will want to be paid within 30 or 60 days.
Est accusantium et necessitatibus eos error cumque nam. Necessitatibus tenetur esse aut sequi. Explicabo blanditiis sequi non dicta voluptas natus. Vel dolores ducimus architecto mollitia dicta ea. Quia molestias est repellendus vel.
Asperiores ipsa accusamus molestiae quaerat totam ad error. Qui occaecati est qui sint excepturi non eum.
Blanditiis rerum blanditiis doloremque non. Delectus aut ipsam velit illo odit voluptates. Deleniti voluptas nesciunt rerum consequuntur voluptates est quis. Possimus dolor laborum et sunt ea. Ratione at reiciendis neque qui vel architecto. Laborum necessitatibus amet nam sit. Ut animi quam temporibus possimus maiores quas.
Numquam doloremque eos corporis expedita magni unde. Quisquam reiciendis ab nihil natus sed. Quo nihil soluta recusandae. Corporis iure et mollitia nihil illo debitis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...