Ratio: Receivables divided by the Average Daily Sales
where Average Daily Sales = (Annual Sales/365).
Example: The Round Number CompanySales = 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 part of the Cash Conversion Cycle.
Also known as Days Sales Outstanding or Average Collection Period.
The Visual Finance graphic automatically shows the Days Sales in Receivables.
term list.