Days of Sales Outstanding, also known as Days of Receivables, is an estimate of collection period. It illustrates how long it takes a company to collect accounts receivables in relation to their level of sales.
Days of Sales Outstanding = Accounts Receivable / (Cost of Sales / 365)
- Wikipedia – Days sales outstanding – Wikipedia’s explanation of days sales outstanding.
- Accounting Tools – Days sales outstanding calculation – A walk through an example formula for DSO.
- CFO – Six ways to reduce days sales outstanding – Some ideas on how to reduce DSO.
- Funding Gates – Reduce DSO: Minimizing Your Days Sales Outstanding – Some more ideas on how to reduce DSO.