Days sales outstanding: Difference between revisions
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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. | 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 | |||
For example; | |||
if accounts receivable = EUR 50m; and | |||
Daily credit sales = EUR 2m | Daily credit sales = EUR 2m | ||
Then Days sales outstanding = EUR 50m/EUR 2m = 25 days. | Then Days sales outstanding | ||
= EUR 50m/EUR 2m | |||
= 25 days. | |||
Based on <u>annual</u> 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). | Based on <u>annual</u> 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 | 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). | = 25 days (as before). | ||
Also known as Days billing outstanding (DBO) or Days receivables outstanding (DRO). | Also known as Days billing outstanding (DBO) or Days receivables outstanding (DRO). | ||
== See also == | == See also == | ||
Revision as of 08:16, 25 September 2014
(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).
