DSO Calculator

Formula

The formula to calculate Days Sales Outstanding (DSO) is:

\[ \text{DSO} = \left( \frac{\text{Accounts Receivable}}{\text{Total Credit Sales}} \right) \times \text{Number of Days} \]

Where:

$ \text{Accounts Receivable} $ is the average accounts receivable balance during the period.
$ \text{Total Credit Sales} $ is the total value of credit sales during the same period.
$ \text{Number of Days} $ is the number of days in the period being measured (e.g., 365 days for a year).

Example

Let's say the accounts receivable is $50,000, the total credit sales are $200,000, and the number of days is 365. Using the formula:

\[ \text{DSO} = \left( \frac{50,000}{200,000} \right) \times 365 = 91.25 \text{ days} \]

So, the Days Sales Outstanding (DSO) is approximately 91.25 days.

What is Days Sales Outstanding (DSO)?

Days Sales Outstanding (DSO) is a measure of the average number of days it takes a company to collect payment for a sale. It is an important metric for assessing a company's efficiency in managing its receivables and cash flow.