This illustrated glossary uses Visual Finance™ to provide a contextualized 'big picture' view of financial results. The examples feature data for the Round Number Company—a 'made-up company' with simplified figures. The Appendix presents an explanation of how to read Visual Finance as well as the financial statements and VF views for the Round Number Company.
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.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.