What is the Formula for Days Sales Outstanding? DSO is one of the three primary metrics used to calculate a company’s cash conversion cycle. A high DSO may lead to cash flow problems in the long run. On the other hand, a high DSO means it takes more days to collect receivables. If the result is a low DSO, it means that the business takes a few days to collect its receivables. The period of time used to measure DSO can be monthly, quarterly, or annually. This number is then multiplied by the number of days in the period of time.
DSO can be calculated by dividing the total accounts receivable during a certain time frame by the total net credit sales.
Updated FebruWhat is Days Sales Outstanding (DSO)?ĭays Sales Outstanding (DSO) represents the average number of days it takes credit sales to be converted into cash or how long it takes a company to collect its account receivables.
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