This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
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.
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Calculator for Days Sales In Receivables
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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.