The Income|Outcome^® Contextuary

The Days Sales Outstanding ratio shows how quickly Receivables (i.e. the proceeds fromSales) are converted into Cash. It is the average number of days to receive payment.

Ratio:Receivables divided by the Average Daily Sales

where Average Daily Sales = (Annual zsales/365).

Example: The Round Number Company Sales = 200; Receivables = 40 Average Daily Sales = 200/365 = 0.55 Days Sales Outstanding = 40/.55 = 73 Days

The ratio shows how quickly the proceeds from sales are converted into Cash.

Days Sales Outstanding is partof theCash Conversion Cycle.

Also known as Average Collection Period or Days Sales In Receivables.

The Visual Finance graphic automatically shows the Days Sales in Receivables.

See How Quickly do Accounts Receivable Move Into Cash?

this is automatically shown on the Visual Finance graphic.

Days Sales Outstanding (DSO) = Accounts Receivable (A/R) /Average Daily Sales

where Average Daily Sales = Sales/365

Accounts Receivable is aso called Receivables. Often calledDebtors outside North America.

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