The definition of a datum is a fact used to make a conclusion or a point of reference in geography or geology. An example of a datum is a new scientific discovery used to reach a conclusion about the common cold.
How do you estimate minimum cash balance for the company? 2 ways I heard about are: 1) keep it equal to cash balance on B/S and 2) based on Net Working Capital. Is any of those methods preferred? Is there any other school of calculation that? And, if NWC method, then what exactly do you include in calculation (like include or excl.
The minimum cash balance you select is somewhat arbitrary, and is a function of sales, industry, and other unquantifiable factors. For example, some business activities are cash-intensive, while others are not. Minimum cash balances might range anywhere from 2% to 10% of sales. Company management will have a pretty good idea of what figure to use, as might more senior investment bankers. In any case, don't lose any sleep over this number.