Financial statement data for years ending December 31 for Newton Company follow:

Line Item Description	20Y9	20Y8
Cash (end of year)	$25,500	$24,250
Short-term investments (end of year)	8,270	9,460
Operating expenses	60,135	63,780
Depreciation expense	13,225	11,400
Determine the days’ cash on hand for 20Y8 and 20Y9. Assume 365 days in a year. Round all calculations to one decimal place.

Year	Days’ Cash on Hand
20Y8:	fill in the blank 1 of 2
 days
20Y9:	fill in the blank 2 of 2
 days


Days' Cash on Hand measures the number of days a company can continue to pay its operating expenses using its available cash and short-term investments. It is calculated using the following formula:

\[
\text{Days' Cash on Hand} = \frac{\text{Cash} + \text{Short-term Investments}}{\frac{\text{Operating Expenses} - \text{Depreciation Expense}}{365}}
\]

### For 20Y8:
- Cash = \$24,250
- Short-term Investments = \$9,460
- Operating Expenses = \$63,780
- Depreciation Expense = \$11,400

#### Step 1: Calculate daily operating expenses for 20Y8 (excluding depreciation)
\[
\text{Adjusted Operating Expenses} = 63,780 - 11,400 = 52,380
\]
\[
\text{Daily Operating Expenses} = \frac{52,380}{365} = 143.5
\]

#### Step 2: Calculate Days' Cash on Hand for 20Y8
\[
\text{Days' Cash on Hand (20Y8)} = \frac{24,250 + 9,460}{143.5} = \frac{33,710}{143.5} = 235.0 \text{ days}
\]

### For 20Y9:
- Cash = \$25,500
- Short-term Investments = \$8,270
- Operating Expenses = \$60,135
- Depreciation Expense = \$13,225

#### Step 1: Calculate daily operating expenses for 20Y9 (excluding depreciation)
\[
\text{Adjusted Operating Expenses} = 60,135 - 13,225 = 46,910
\]
\[
\text{Daily Operating Expenses} = \frac{46,910}{365} = 128.5
\]

#### Step 2: Calculate Days' Cash on Hand for 20Y9
\[
\text{Days' Cash on Hand (20Y9)} = \frac{25,500 + 8,270}{128.5} = \frac{33,770}{128.5} = 262.8 \text{ days}
\]

### Final Answer:
- **Days' Cash on Hand (20Y8): 235.0 days**
- **Days' Cash on Hand (20Y9): 262.8 days**

Would you like any further details or explanations?

Here are five related questions you might find helpful:
1. How does depreciation affect cash flow compared to operating expenses?
2. Why is it important to exclude depreciation when calculating Days' Cash on Hand?
3. What other financial ratios could assess liquidity?
4. How could Newton Company improve its Days' Cash on Hand?
5. How might changes in short-term investments impact financial stability?

**Tip:** Tracking cash on hand regularly helps assess a company's short-term financial health.

Financial statement data for years ending December 31 for Newton Company follow:

Line Item Description	20Y9	20Y8
Cash (end of year)	$25,500	$24,250
Short-term investments (end of year)	8,270	9,460
Operating expenses	60,135	63,780
Depreciation expense	13,225	11,400
Determine the days’ cash on hand for 20Y8 and 20Y9. Assume 365 days in a year. Round all calculations to one decimal place.

Year	Days’ Cash on Hand
20Y8: fill in the blank 1 of 2
20Y9: fill in the blank 2 of 2

Learn how to calculate Days' Cash on Hand for Newton Company for the years 20Y8 and 20Y9. The problem involves using financial data, including cash, short-term investments, operating expenses, and depreciation expenses, to assess the company's liquidity. Suitable for undergraduate finance or accounting students.

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