The formula to calculate the Defensive Interval Ratio is:
\[ \text{Defensive Interval Ratio} = \frac{\text{Current Assets}}{\text{Average Daily Expenditures}} \]
The defensive interval ratio is a financial metric that indicates the number of days a company can sustain its operations using its current assets without needing additional funding. It is calculated by dividing current assets by average daily expenditures.
Let's assume the following:
Step 1: Calculate the current assets:
\[ \text{Current Assets} = \$10,000,000 + \$5,000,000 + \$17,000,000 = \$32,000,000 \]
Step 2: Calculate the average daily expenditures:
\[ \text{Average Daily Expenditures} = \frac{110,000,000 - 37,000,000}{365} = \$200,000 \]
Step 3: Calculate the defensive interval ratio:
\[ \text{Defensive Interval Ratio} = \frac{32,000,000}{200,000} = 160 \text{ days} \]
Therefore, the Defensive Interval Ratio is 160 days.
