where
current assets cash marketable securities net receivablesdaily operational expenses annual operating expenses noncash charges 365advantages of the defensive interval ratio dir the dir is a helpful tool in evaluating a company s financial health because it provides a real world metric in number of days in this fashion a company knows exactly how long it can carry on business by meeting daily operational expenses without running into any financial difficulty that would likely require it to access additional funds through either new equity investment a bank loan or the sale of long term assets this is extremely important in managing its financial health as it can manage its balance sheet before having to take on unwanted debt in that respect it can be considered a more useful liquidity measure to examine than the current ratio which while providing a clear comparison of a company s assets to its liabilities does not give any definitive indication of how long a company can function financially without encountering significant problems in terms of simple day to day operations 