Quick Definition

Days Sales Outstanding (DSO) is a financial metric that measures the average number of days a company takes to collect payment after a sale has been made.

Formula

Examples

• 1A company with a DSO of 40 means it typically takes 40 days to collect payment after making a sale.
• 2If a company's DSO decreases from 50 to 30, it indicates improved efficiency in collecting receivables.
• 3A high DSO might indicate issues with cash flow, suggesting that a company is taking too long to collect payments.
• 4Comparing DSO between similar companies can provide insights into how efficiently they manage their credit and collections.

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