Blog & Resources

Business Defensive Interval Ratio

The Defensive Interval Ratio can inform a business how long it can continue to pay its bills without generating additional sales.

It is calculated as follows:

(Cash + Cash Equivalents + Trade Receivables) / Average Daily Expenses

For example, your business has the following:

  • $25,000 in the bank
  • Is owed $60,000 by its customers
  • Spends on average $2,000 per day

Therefore ($25,000 +$60,000) / $2,000 = 42.5 days is your Defensive Interval Ratio.

If you would like to discuss further please contact us:
 McNamara & Company - Chartered Accountants, located minutes from the Melbourne CBD
 Phone +61 3 9428 1062

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