Days sales outstanding: Difference between revisions
imported>Doug Williamson m (Added more space so that calculations are clearer) |
imported>Doug Williamson (Align presentation of formula with qualification material) |
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For example; | '''For example;''' | ||
if accounts receivable = EUR 50m; and | if accounts receivable = EUR 50m; and | ||
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Then Days sales outstanding | Then Days sales outstanding | ||
= EUR 50m/EUR 2m | = EUR 50m / EUR 2m | ||
= 25 days. | = 25 days. | ||
| Line 19: | Line 19: | ||
For example; | '''For example;''' | ||
given annual credit sales = EUR 730m (and accounts receivable = EUR 50m as before): | given annual credit sales = EUR 730m (and accounts receivable = EUR 50m as before): | ||
| Line 25: | Line 25: | ||
Days sales outstanding | Days sales outstanding | ||
= EUR 50m/EUR 730m x 365 days | = EUR 50m /EUR 730m x 365 days | ||
= 25 days (as before). | = 25 days (as before). | ||
Revision as of 15:31, 14 March 2015
(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).
