The formula to calculate the Days to Cover (DTC) is:
\[ DTC = \frac{SS}{ADV} \]
Where:
Days to Cover, also known as short ratio, is a financial metric used to understand the liquidity of a company's shares. It measures the number of days it would take for all short sellers to cover their positions if the price of the stock begins to rise. A higher days to cover ratio can indicate a higher potential for a short squeeze, which can lead to a rapid increase in a stock's price.
Let's assume the following values:
Using the formula to calculate the Days to Cover:
\[ DTC = \frac{1,000,000}{200,000} = 5 \text{ days} \]
The Days to Cover is 5 days.
