The guard interval ratio (DIR) seeks to calculate how many days a company can operate relying only on liquid assets.
Current assets are compared with daily expenses to determine the guard interval factor.
The guard interval ratio can be viewed over time to determine whether a company’s liquidity buffer is increasing or decreasing to cover its costs.
Many analysts find the guard interval ratio (DIR) more useful than the quick ratio or current ratio because it compares assets to actual expenses rather than liabilities.
While a higher DIR number is preferable, there is no specific number that indicates what is right or best to aim for.
Accounting ratios, an important subset of financial ratios, are a group of metrics used to measure a company’s performance and profitability based on its financial statements.
The acid test, or quick ratio, compares a company’s shortest-term assets to its shortest-term liabilities to see if the company has enough cash to pay off its immediate liabilities, such as short-term debt.
Activity Ratio broadly describes any type of financial measure that helps investors and analysts evaluate how effectively a company is using its assets to generate revenue and cash.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.
Benefit Cost Ratio (BCR) is a measure showing the relationship between the relative costs and benefits of a proposed project, expressed in monetary or qualitative terms.
The CAPE ratio is used to analyze the long-term financial performance of a public company, taking into account the impact of various economic cycles on the company’s profit.
Capital expenditures are payments for goods or services that are recognized or capitalized on a company’s balance sheet, rather than expensed on the income statement.