Projected Daily Cash Requirement = 1,82,500 / number of days in a year
= (1,82,500 / 365)
= Rs. 500
Defensive Interval Ratio = Quick Assets / Projected Daily Cash Requirement
= (40,000 / 500)
= 80 days
A high defensive interval ratio indicates safety of short term liquidity, thus the quick assets in this case are sufficient to meet operating expenses for 80 days.
