Defensive Interval Ratio (DIR) Calculator

Calculate how long your current assets can cover daily expenses with our Defensive Interval Ratio Calculator. Quick, simple, and accurate.

Result Defensive Interval Ratio (Days) 0 Current Assets $0 Average Daily Expenditures $0

Defensive Interval Ratio Formula

Defensive interval ratio = Current assets / Average daily expenditures

$4000 / $2700 = 1.4815.The formula calculates that John's company uses $4,000 in current assets and spends an average of $2,700 per day on expenditures, resulting in a defensive interval ratio of 1.4815. This means the company can sustain its daily operations for approximately 1.48 days using its current assets alone, without requiring additional financing.

Current Assets Formula

Current assets = Cash and cash equivalents + Marketable securities + Accounts receivable

$12200 + $3300 + $2300 = $17800.The total current assets of $17,800 represent the company's liquid resources and assets that can be quickly converted into cash, indicating its ability to meet short-term financial obligations and maintain a stable financial position.

Average Daily Expenditures Formula

Average daily expenditures = ( Annual operating expense - Annual non cash charges ) / 365

( $5500 - $6500 ) / 365.0 = $-2.7397.Sarah's company incurs $5,500 per year in expenses, excluding $6,500 in non-cash expenses. This results in a net negative cash flow of -$2,739.70 per year. This figure indicates that Sarah's average daily cash flow is negative, meaning her company is spending more cash than it is generating each day.

Meaning

The Defensive Interval Ratio (DIR) is a measure used to assess the effectiveness of a security system's response time. It indicates how quickly a security system can respond to an alarm, with higher values suggesting faster and more efficient response times.