what is the defensive interval ratio dir 
the defensive interval ratio dir also called the defensive interval period dip or basic defense interval bdi is a financial metric that indicates the number of days that a company can operate without needing to access noncurrent assets long term assets whose full value cannot be obtained within the current accounting year or additional outside financial resources alternatively this can be viewed as how long a company can operate while relying only on liquid assets the dir is sometimes viewed as a financial efficiency ratio but is most commonly considered a liquidity ratio understanding the defensive interval ratio dir the dir is considered by some market analysts to be a more useful liquidity ratio than the standard quick ratio or current ratio due to the fact that it compares assets to expenses rather than comparing assets to liabilities the dir is commonly used as a supplementary financial analysis ratio along with the current or quick ratio to evaluate a company s financial health since there can be substantially different dir and quick or current ratio values if for example a company has a large number of expenses but little or no debt the dir is called the defensive interval ratio because its calculation involves a company s current assets which are also known as defensive assets defensive assets consist of cash cash equivalents such as bonds or other investments and other assets that can readily be converted to cash such as accounts receivables for example if a company has 100 000 cash on hand 50 000 worth of marketable securities and 50 000 in accounts receivables it has a total of 200 000 in defensive assets if the company s daily operational expenses equal 5 000 the dir value is 40 days 200 000 5 000 of course a higher dir number is considered good as not only does it show that a company can rely on its own finances but it also provides a company with enough time to evaluate other meaningful options in paying its expenses that being said there is no specific number that is considered the best or right number for a dir it is often worth comparing the dir of different companies in the same industry to get an idea of what is appropriate which would also help determine which companies could be better investments formula for the defensive interval ratio dir the formula for calculating the dir is dir expressed as number of days current assets daily operational expenses