Defensive Interval Ratio or Defensive Ratio is an Liquidity Ratio that helps in understanding the company’s position in meeting its sudden short term obligations.
It shows how many days can the company meet its daily cash expenses using only Current Assets.
Generally higher the ratio, stronger will be the liquidity position.
The formula to calculate the ratio is
Current Assets/Daily Cash Expenditure
Using this Defensive Interval Ratio template, you can easily calculate the ratio for any company.
This article on Defensive Interval Ratioexplains the topic with meaning, example and application/interpretation of ratio
- The file has template of balance sheet and income statement in a separate worksheet.
- The main calculation sheet picks the value from the financials and calculates the ratio easily.
- We have used the financials of Walmart Inc, you can easily plug in the financials of any company to arrive at the Ratio.