Days Sales Outstanding - DSOWhat Does Days Sales Outstanding - DSO Mean?
A measure of the average number of days that a company takes to collect revenue after a sale has been made. A low DSO number means that it takes a company fewer days to collect its accounts receivable. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect money.
Days sales outstanding is calculated as:
Investopedia explains Days Sales Outstanding - DSO
Due to the high importance of cash in running a business, it is in a company's best interest to collect outstanding receivables as quickly as possible. By quickly turning sales into cash, a company has the chance to put the cash to use again - ideally, to reinvest and make more sales. The DSO can be used to determine whether a company is trying to disguise weak sales, or is generally being ineffective at bringing money in. For most businesses, DSO is looked at either quarterly or annually.
by: Jose J. R. | over a year ago | Reports / BI
Comments
Jose -- What is your calculation for DSO? And how is it different from the DSO number that is available on the Business Insights Dashboard?