The ratio that relates short interest to the average daily volume over a given period of time (typically 30 days). It reflects the average number of days it would take for short sellers to repurchase all the borrowed shares of stock (short stock), on assumption that all daily trades are used to cover short sales. The higher the ratio, the longer it would take to purchase back the short stock to close out the position. As such, it will be difficult for short sellers to cover their short positions.

Conversely, the lower the ratio, the shorter it would take to buy back the borrowed shares to close out the position. If unexpected good news would be circulated on a share with a high short interest ratio, the share prices could move up, and short sellers will be forced to buy the shares at their currently high price before it increases ever further.