Days sales outstanding: Difference between revisions
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(DSO). A credit measurement ratio calculated by dividing accounts receivable outstanding at the end of time period by the average daily credit sales for the period. | (DSO). | ||
A credit measurement ratio calculated by dividing accounts receivable outstanding at the end of time period by the average daily credit sales for the period. | |||
For example, if accounts receivable = EUR 50m; and | For example, if accounts receivable = EUR 50m; and |
Revision as of 13:59, 5 August 2013
(DSO).
A credit measurement ratio calculated by dividing accounts receivable outstanding at the end of time period by the average daily credit sales for the period.
For example, if accounts receivable = EUR 50m; and Daily credit sales = EUR 2m
Then Days sales outstanding = EUR 50m/EUR 2m = 25 days.
Based on annual total sales - or total sales for any other period - the calculation is modified appropriately for the length of the time period in days (for example 365 days per year).
For example given annual credit sales = EUR 730m (and accounts receivable = EUR 50m as before): Days sales outstanding = EUR 50m/EUR 730m x 365 days
= 25 days (as before).
Also known as Days billing outstanding (DBO) or Days receivables outstanding (DRO).