Enter the total accounts receivable, net sales, and number of days into the calculator to determine the days sales outstanding.
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Days Sales Outstanding Formula
The following equation can be used to calculate the days sales outstanding.
DSO = AR / (NS / #D)
- Where DSO is the days sales outstanding
- AR is the accounts receivable
- NS is the net sales
- #D is the number of days
Days Sales Outstanding Definition
Days sales outstanding, or DSO for short, is the average number of days it takes a company to receive payment on sold goods. Since companies typically have certain payment terms with clients, this is often 30+ days.
Days Sales Outstanding Example
How to calculate days sales outstanding?
- First, determine the total number of days.
Determine the total time period being analyzed in days.
- Next, determine the total accounts receivable.
Calculate the total accounts receivable during the time period.
- Next, determine the total net sales.
Calculate the total net sales during the time period.
- Finally, calculate the DSO.
Calculate the days sales outstanding using the formula above.
FAQ
The days sales outstanding are the average number of days it takes for a company to receive money on sales.
Typically, for credit based business, 30 days is a good time frame to shoot for.
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