Days sales outstanding: Difference between revisions
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'''Example 1''' | '''Example 1''' | ||
Accounts receivable = EUR 50m | Accounts receivable = EUR 50m. | ||
Daily credit sales = EUR 2m | Daily credit sales = EUR 2m. | ||
= | Then Days sales outstanding: | ||
= 50 / 2 | |||
= 25 days. | = 25 days. | ||
| Line 21: | Line 22: | ||
'''Example 2''' | '''Example 2''' | ||
Annual credit sales = EUR 730m | Annual credit sales = EUR 730m. | ||
Accounts receivable = EUR 50m. | |||
Days sales outstanding | Then Days sales outstanding: | ||
= | = 50 / 730 x 365 | ||
= 25 days (as before). | = 25 days (as before). | ||
Revision as of 12:35, 21 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.
Example 1
Accounts receivable = EUR 50m.
Daily credit sales = EUR 2m.
Then Days sales outstanding:
= 50 / 2
= 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).
Example 2
Annual credit sales = EUR 730m.
Accounts receivable = EUR 50m.
Then Days sales outstanding:
= 50 / 730 x 365
= 25 days (as before).
DSO is also sometimes known as Days billing outstanding (DBO) or Days receivables outstanding (DRO).
