What components are considered in calculating days cash on hand?

Days cash on hand is a financial metric used to evaluate an organization's liquidity. It measures how many days a healthcare organization can continue its operations using only its cash and cash equivalents, without relying on additional revenue or financing. The correct choice incorporates cash equivalents and daily operating expenses, which are crucial components of this calculation.

Cash equivalents include short-term investments that can readily be converted to cash, providing a complete picture of what resources are immediately available. Daily operating expenses represent the total costs of running the organization each day, such as payroll, utilities, and supplies. By dividing the total cash and cash equivalents by daily operating expenses, the resulting figure tells us how many days the organization can sustain its operations under current cash balances.

The focus on both cash and daily operating expenses is essential, as this combination effectively captures the liquidity and operational efficiency of the organization, enabling stakeholders to assess financial health and make informed decisions regarding the management of resources.