Defensive Interval Ratio Calculator: Assess Your Company’s Financial Resilience

How to use the tool

1. Cash – type your on-hand money. Example: 130 000 or 310 000 USD.
2. Marketable Securities – add liquid investments. Example: 90 000 or 175 000 USD.
3. Net Receivables – insert collectible customer balances. Example: 70 000 or 140 000 USD.
4. Annual Operating Expenses – total yearly outgoings. Example: 650 000 or 2 400 000 USD.
5. Non-Cash Charges – depreciation, amortisation, etc. Example: 20 000 or 150 000 USD.
6. Press Calculate; the tool instantly shows Current Assets, Daily Operational Expenses and Defensive Interval Ratio.

Formulas used

$$\text{Current Assets}= \text{Cash} + \text{Marketable Securities} + \text{Net Receivables}$$

$$\text{Daily Operational Expenses}=rac{\text{Annual Operating Expenses} – \text{Non-Cash Charges}}{365}$$

$$\text{Defensive Interval Ratio}=rac{\text{Current Assets}}{\text{Daily Operational Expenses}} \;(\text{days})$$

Worked examples

• Scenario A: 130 000 + 90 000 + 70 000 = 290 000 USD current assets. Daily expenses = (650 000–20 000)/365 ≈ 1 726.03 USD. DIR = 290 000/1 726.03 ≈ 168.1 days.
• Scenario B: 500 000 + 200 000 + 250 000 = 950 000 USD current assets. Daily expenses = (2 400 000–150 000)/365 ≈ 6 164.38 USD. DIR ≈ 154.2 days.

Quick-Facts

• Healthy DIR range for manufacturers: 120–180 days (Corporate Finance Institute, 2024).
• Service firms average 90–120 days due to lighter inventories (PwC Working Capital Report 2023).
• Some analysts use 360 instead of 365 days for simplicity (Brigham & Ehrhardt, Financial Management 15e).
• Cash holdings in S&P 500 sit at ~13 % of total assets (FactSet Cash & Investments Trends 2023).

FAQ

What is the Defensive Interval Ratio?

The ratio tells how many days you can meet operating costs using liquid assets without new revenue (Investopedia, https://www.investopedia.com).

How does the calculator work?

It sums cash, marketable securities and receivables, divides by daily cash expenses, and outputs your runway in days—no manual math.

What is a good DIR score?

Analysts flag scores above 120 days as comfortable for most industries; below 60 days signals tight liquidity (CFI, 2024).

How can I improve my DIR?

Increase liquid assets, speed up receivables, reduce discretionary spending, or refinance non-cash charges into longer-term debt.

Does DIR differ from the current ratio?

Yes. DIR measures time coverage of expenses, while the current ratio compares current assets to current liabilities (Brigham & Ehrhardt, 2022).

When should I recalculate?

Update after major cash movements, quarterly closes, or strategic planning sessions to keep decisions data-driven.

Can the DIR be negative?

No. If daily operational expenses exceed zero, liquid assets cannot be negative; a zero asset balance produces a zero DIR.

What data do I need?

Latest cash balance, marketable securities value, net receivables, annual operating costs and annual non-cash charges.