Days sales outstanding

How long it takes to collect from customers, measured as average receivables divided by daily credit sales.

Also called DSO

Days sales outstanding in round numbers

Hypothetical: average receivables are US$2m and annual credit sales are US$18m on a consistent scope. Using 365 days, 2 ÷ 18 × 365 = 40.56 days, or about 41. This average collection measure does not mean that exactly 41 days of sales are always tied up.

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Hypothetical collection measure; 365-day year
MeasureValue
Average receivablesUS$2m
Annual credit salesUS$18m
Days sales outstanding2 ÷ 18 × 365 = 40.56 days ≈ 41 days

Working capital · Accounts receivable · Inventory days · All of the glossary