Operations
Days sales outstanding
The standard form. The ratio of receivables to revenue gives the unpaid share of sales, and multiplying by the days in the period converts that share into a number of days.
The Formula
DSO = (Accounts Receivable / Revenue) x Days
The standard form. The ratio of receivables to revenue gives the unpaid share of sales, and multiplying by the days in the period converts that share into a number of days.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| AR | Accounts receivable | currency | Money owed by customers at the measurement date, net of provisions. 150,000 in the default example. |
| Revenue | Credit sales for the same period | currency | Cash sales never create a receivable, so they must be excluded. 1,800,000 in the default example. |
| Days | Number of days in the period | days | 365 for a full year, 90 for a quarter. Must describe the same window as the revenue figure. |
What Each Symbol Means
ARcurrency
Accounts receivable
Money owed by customers at the measurement date, net of provisions. 150,000 in the default example.
Revenuecurrency
Credit sales for the same period
Cash sales never create a receivable, so they must be excluded. 1,800,000 in the default example.
Daysdays
Number of days in the period
365 for a full year, 90 for a quarter. Must describe the same window as the revenue figure.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate days sales outstanding page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Days Sales Outstanding, filed under Business. Every number the guide produces comes from substituting into this one line.