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| (DSO).
| | ''Foreign exchange reference rates'' |
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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.
| | WMR are the foreign exchange market reference rates collated and published by the WM Company and Thomson Reuters. |
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| <span style="color:#4B0082">'''Example 1'''</span>
| | ==See also== |
| | | *[[Foreign exchange]] |
| Accounts receivable = EUR 50m.
| | *[[WMR scandal]] |
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| Daily credit sales = EUR 2m.
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| Then Days sales outstanding:
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| = 50 / 2
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| = 25 days.
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| 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).
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| <span style="color:#4B0082">'''Example 2'''</span>
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| Annual credit sales = EUR 730m.
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| Accounts receivable = EUR 50m.
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| Then Days sales outstanding:
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| = (50 / 730) x 365
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| = 25 days (as before).
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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).
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| == See also == | |
| * [[Credit]] | |
| * [[Debtor days]]
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| * [[Ratio analysis]] | |
Revision as of 14:06, 1 October 2017
Foreign exchange reference rates
WMR are the foreign exchange market reference rates collated and published by the WM Company and Thomson Reuters.
See also
