The Days Sales Outstanding calculator computes days sales outstanding based on the Total Receivables,
INSTRUCTIONS: Choose units and enter the following:
- (TR) Total Receivables
- (TCS) Total Credit Sales
- (DiP) Days in Period
Days Sales Outstanding (DSO): The results are returned in number of days. However, these can be automatically converted to compatible units via the pull-down menu.
The Math / Science
Days Sales Outstanding tests the efficiency of the conversion of receivables into cash.
A result greater than a company's Terms (ie, Terms net 30, but DSO of 45) reveals that, on average, credit customers are taking 15 days beyond term to pay.
Typical days of period are 360 or 365.
The formula for Days Sales Outstanding is:
DSO = (TR)/(TCS) * DiP
where:
- DSO = Days Sales Outstanding
- TR = Total Receivables
- TCS = Total Credit Sales
- DiP = Days in Period
The Accounting Ratio Calculator provides numerous standard equations used in business accounting, including the following:
- Best Possible Days Sales Outstanding - gives useful insight into delinquencies, as it considers only Current Receivables.
- Current Ratio - A liquidity ratio that measures the ability to pay short-term liabilities.
- Days Sales Outstanding - tests the efficiency of the conversion of receivables into cash.
- Debt to Equity Ratio - measures how a company is leveraging its debt against the resources of its owners.
- Inventory Turnover Ratio - reveals how many times inventory turns over in a period
- Net Cash Flow from Operations - Net income - Increase in Receivables + Increase in Payables.
- Quick Assets - cash and assets that can be converted quickly to cash
- Quick Ratio (aka Acid Test) - measures the ability to pay short-term liabilities with cash and assets quickly convertible to cash
- Stockholder's Equity - sum of Common Stock at Par, Premium on Common Stock, Preferred Stock at Par, Premium on Preferred Stock and Retained Earnings