Days of Sales Outstanding (DSO) Calculator

Our DSO Calculator helps businesses determine the average number of days it takes to collect payment after a sale, aiding in effective working capital management.

Results

Days Sales Outstanding (DSO): 0

Data Source and Methodology

All calculations are strictly based on standard financial formulas for DSO. For more details, refer to Example Financial Source.

The Formula Explained

DSO: \( \text{DSO} = \left( \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \right) \times \text{Number of Days} \)

Glossary of Terms

  • Accounts Receivable: Money owed by customers for credit sales.
  • Net Credit Sales: Total sales made on credit minus returns and allowances.
  • Days Sales Outstanding (DSO): The average number of days it takes to collect payment after a sale.

How It Works: A Step-by-Step Example

Imagine a company with $500,000 in accounts receivable and $2,000,000 in net credit sales over a 365-day year. The DSO would be calculated as follows:

DSO = (500,000 / 2,000,000) × 365 = 91.25 days.

Frequently Asked Questions (FAQ)

What is Days of Sales Outstanding (DSO)?

DSO is a measure of the average number of days that it takes a company to collect payment after a sale has been made.

How is DSO calculated?

DSO is calculated by dividing the total accounts receivable during a period by the total net credit sales and multiplying the result by the number of days in the period.

Why is DSO important?

A lower DSO indicates that a company is collecting payments quickly, which is better for cash flow.

Can DSO vary by industry?

Yes, DSO can vary significantly by industry and is often used to compare companies within the same industry.

What are some strategies to reduce DSO?

Strategies include improving invoicing processes, offering discounts for early payments, and using automated reminders.

Audit: Complete
Formula (LaTeX) + variables + units
This section shows the formulas used by the calculator engine, plus variable definitions and units.
Formula (extracted LaTeX)
\[','\]
','
Formula (extracted text)
DSO: \( \text{DSO} = \left( \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \right) \times \text{Number of Days} \)
Variables and units
  • No variables provided in audit spec.
Sources (authoritative):
Changelog
Version: 0.1.0-draft
Last code update: 2026-01-19
0.1.0-draft · 2026-01-19
  • Initial audit spec draft generated from HTML extraction (review required).
  • Verify formulas match the calculator engine and convert any text-only formulas to LaTeX.
  • Confirm sources are authoritative and relevant to the calculator methodology.
Verified by Ugo Candido on 2026-01-19
Profile · LinkedIn
``` , ', svg: { fontCache: 'global' } };

Days of Sales Outstanding (DSO) Calculator

Our DSO Calculator helps businesses determine the average number of days it takes to collect payment after a sale, aiding in effective working capital management.

Results

Days Sales Outstanding (DSO): 0

Data Source and Methodology

All calculations are strictly based on standard financial formulas for DSO. For more details, refer to Example Financial Source.

The Formula Explained

DSO: \( \text{DSO} = \left( \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \right) \times \text{Number of Days} \)

Glossary of Terms

  • Accounts Receivable: Money owed by customers for credit sales.
  • Net Credit Sales: Total sales made on credit minus returns and allowances.
  • Days Sales Outstanding (DSO): The average number of days it takes to collect payment after a sale.

How It Works: A Step-by-Step Example

Imagine a company with $500,000 in accounts receivable and $2,000,000 in net credit sales over a 365-day year. The DSO would be calculated as follows:

DSO = (500,000 / 2,000,000) × 365 = 91.25 days.

Frequently Asked Questions (FAQ)

What is Days of Sales Outstanding (DSO)?

DSO is a measure of the average number of days that it takes a company to collect payment after a sale has been made.

How is DSO calculated?

DSO is calculated by dividing the total accounts receivable during a period by the total net credit sales and multiplying the result by the number of days in the period.

Why is DSO important?

A lower DSO indicates that a company is collecting payments quickly, which is better for cash flow.

Can DSO vary by industry?

Yes, DSO can vary significantly by industry and is often used to compare companies within the same industry.

What are some strategies to reduce DSO?

Strategies include improving invoicing processes, offering discounts for early payments, and using automated reminders.

Audit: Complete
Formula (LaTeX) + variables + units
This section shows the formulas used by the calculator engine, plus variable definitions and units.
Formula (extracted LaTeX)
\[','\]
','
Formula (extracted text)
DSO: \( \text{DSO} = \left( \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \right) \times \text{Number of Days} \)
Variables and units
  • No variables provided in audit spec.
Sources (authoritative):
Changelog
Version: 0.1.0-draft
Last code update: 2026-01-19
0.1.0-draft · 2026-01-19
  • Initial audit spec draft generated from HTML extraction (review required).
  • Verify formulas match the calculator engine and convert any text-only formulas to LaTeX.
  • Confirm sources are authoritative and relevant to the calculator methodology.
Verified by Ugo Candido on 2026-01-19
Profile · LinkedIn
``` ]], displayMath: [['\\[','\\]']] }, svg: { fontCache: 'global' } };, svg: { fontCache: 'global' } };

Days of Sales Outstanding (DSO) Calculator

Our DSO Calculator helps businesses determine the average number of days it takes to collect payment after a sale, aiding in effective working capital management.

Results

Days Sales Outstanding (DSO): 0

Data Source and Methodology

All calculations are strictly based on standard financial formulas for DSO. For more details, refer to Example Financial Source.

The Formula Explained

DSO: \( \text{DSO} = \left( \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \right) \times \text{Number of Days} \)

Glossary of Terms

  • Accounts Receivable: Money owed by customers for credit sales.
  • Net Credit Sales: Total sales made on credit minus returns and allowances.
  • Days Sales Outstanding (DSO): The average number of days it takes to collect payment after a sale.

How It Works: A Step-by-Step Example

Imagine a company with $500,000 in accounts receivable and $2,000,000 in net credit sales over a 365-day year. The DSO would be calculated as follows:

DSO = (500,000 / 2,000,000) × 365 = 91.25 days.

Frequently Asked Questions (FAQ)

What is Days of Sales Outstanding (DSO)?

DSO is a measure of the average number of days that it takes a company to collect payment after a sale has been made.

How is DSO calculated?

DSO is calculated by dividing the total accounts receivable during a period by the total net credit sales and multiplying the result by the number of days in the period.

Why is DSO important?

A lower DSO indicates that a company is collecting payments quickly, which is better for cash flow.

Can DSO vary by industry?

Yes, DSO can vary significantly by industry and is often used to compare companies within the same industry.

What are some strategies to reduce DSO?

Strategies include improving invoicing processes, offering discounts for early payments, and using automated reminders.

Audit: Complete
Formula (LaTeX) + variables + units
This section shows the formulas used by the calculator engine, plus variable definitions and units.
Formula (extracted LaTeX)
\[','\]
','
Formula (extracted text)
DSO: \( \text{DSO} = \left( \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \right) \times \text{Number of Days} \)
Variables and units
  • No variables provided in audit spec.
Sources (authoritative):
Changelog
Version: 0.1.0-draft
Last code update: 2026-01-19
0.1.0-draft · 2026-01-19
  • Initial audit spec draft generated from HTML extraction (review required).
  • Verify formulas match the calculator engine and convert any text-only formulas to LaTeX.
  • Confirm sources are authoritative and relevant to the calculator methodology.
Verified by Ugo Candido on 2026-01-19
Profile · LinkedIn
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