Days sales outstanding: Difference between revisions
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imported>Doug Williamson (Standardise appearance of page) |
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'''Example 1''' | <span style="color:#4B0082">'''Example 1'''</span> | ||
Accounts receivable = EUR 50m. | Accounts receivable = EUR 50m. | ||
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'''Example 2''' | <span style="color:#4B0082">'''Example 2'''</span> | ||
Annual credit sales = EUR 730m. | Annual credit sales = EUR 730m. | ||
Revision as of 15:00, 13 November 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).
