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
 www.mcnamaraandcompany.com.au/contact-us
 Phone +61 3 9428 1062
 Email admin@mcnamaraandco.com

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