Average Daily Balance Calculator

Formula

The formula to calculate the Average Daily Balance (ADB) is:

\[ \text{ADB} = \frac{\text{SDB}}{\text{D}} \]

Where:

$ \text{ADB} $ is the Average Daily Balance (\$/day)
$ \text{SDB} $ is the Sum of Daily Balances (\$)
$ \text{D} $ is the Number of Days in the period

What is Average Daily Balance?

Average Daily Balance (ADB) is a method used to calculate the average amount of money in an account over a specific period. This metric is commonly used by financial institutions to determine interest charges or earnings. The ADB is calculated by taking the sum of the daily balances and dividing it by the number of days in the period.

Example Calculation

Let's assume the following values:

Sum of Daily Balances (SDB) = $15,000
Number of Days (D) = 30

Using the formula to calculate the Average Daily Balance:

\[ \text{ADB} = \frac{15,000}{30} = 500 \text{ dollars/day} \]

The Average Daily Balance is $500 per day.