Close to your stated terms. The absolute number matters less than the gap: a DSO of forty-five on forty-five day terms is fine, and one of forty on thirty day terms is not.

Businessfinance

Days Sales Outstanding Calculator

Days sales outstanding, and the cash locked up by collecting late. Each day of DSO above terms is a day of revenue sitting in someone else's bank account.

Also called: days sales outstanding, receivables days.

Days sales outstanding

50 days to collect against terms of 30 days, so you are 20 days behind. Every day of DSO ties up ₹1,69,863.

Days beyond terms

Cash tied up per day of DSO

₹1,69,863

Cash locked up beyond terms

₹34,04,110

Receivables turnover

7.29

How this is calculated

Method and background

How this is calculated

DSO is receivables divided by annual revenue, times 365. Comparing it to stated terms is what makes it actionable: thirty-day terms with a DSO of fifty means twenty days of revenue permanently financed by you. Multiplying that gap by daily revenue gives the cash a collections fix would release, which is usually a larger number than anyone expects and needs no external funding.

receivables as a share of annual revenue, expressed in days

AR: Accounts receivable

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

collecting twenty days late

Accounts receivable: ₹85,00,000
Annual credit revenue: ₹6,20,00,000
Stated payment terms: 30

Days sales outstanding50

85 lakh over 6.2 crore times 365

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no receivables means no DSO

Accounts receivable: ₹0
Annual credit revenue: ₹6,20,00,000
Stated payment terms: 30

Days sales outstanding0

boundary

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Method and limits

What it assumes

Revenue is on credit terms and spread evenly across the year.

What it deliberately does not model

A seasonal business needs the countback method rather than a flat annual average.
Cash sales should be excluded from the revenue figure or DSO reads low.

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Frequently asked questions

What is a good DSO?: Close to your stated terms. The absolute number matters less than the gap: a DSO of forty-five on forty-five day terms is fine, and one of forty on thirty day terms is not.