Difference between revisions of "Days sales outstanding"

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= 25 days (as before).
 
= 25 days (as before).
  
A lower result is considered desirable although the business needs to ensure it does not put itself at a competitive disadvantage to other businesses which offer easier credit terms to customers.
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A lower result is generally considered desirable, although the business needs to ensure it does not put itself at a competitive disadvantage to other businesses which offer easier credit terms to customers.
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DSO is also sometimes known as Days billing outstanding (DBO) or Days receivables outstanding (DRO).
 
DSO is also sometimes known as Days billing outstanding (DBO) or Days receivables outstanding (DRO).

Latest revision as of 15:15, 1 December 2018

(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).


A lower result is generally considered desirable, although the business needs to ensure it does not put itself at a competitive disadvantage to other businesses which offer easier credit terms to customers.


DSO is also sometimes known as Days billing outstanding (DBO) or Days receivables outstanding (DRO).


See also