What is my DSO?
Enter net credit sales, accounts receivable at the start and end of the period, and the number of days in the period. You get days sales outstanding (DSO) and the receivables turnover.
- Days sales outstanding (DSO)
- 73
With average receivables of $80,000.00 against $400,000.00 of credit sales over 365 days, it takes 73 days on average to collect a credit sale.
- Accounts receivable turnover
- 5
- Average accounts receivable
- $80,000.00
Days sales outstanding (DSO): 73. With average receivables of $80,000.00 against $400,000.00 of credit sales over 365 days, it takes 73 days on average to collect a credit sale.
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes days sales outstanding (DSO), the average days to collect a credit sale, from credit sales and accounts receivable.
Example with the default inputs (Net credit sales $400,000.00, Accounts receivable at the start $70,000.00, Accounts receivable at the end $90,000.00, Days in the period 365): With average receivables of $80,000.00 against $400,000.00 of credit sales over 365 days, it takes 73 days on average to collect a credit sale.
Method: Average accounts receivable = (beginning + ending) ÷ 2 (ending alone when no beginning is given). Turnover = net credit sales ÷ average accounts receivable. DSO = average accounts receivable ÷ net credit sales × days in the period = days ÷ turnover.
- The credit sales cover the period whose days you enter, and the two balances are from its start and end.
- Arithmetic is exact on the typed decimals; both results show to 2 decimals, halves up.
Worked examples
Each example is checked against the calculator on every build.
- Net credit sales $400,000.00, Accounts receivable at the start $70,000.00, Accounts receivable at the end $90,000.00, Days in the period 365 gives Days sales outstanding (DSO) 73, Accounts receivable turnover 5, Average accounts receivable $80,000.00.Source: OpenStax, Principles of Accounting, Volume 1, 9.3 Determine the Efficiency of Receivables Management Using Financial Ratios (number of days’ sales in receivables = 365 ÷ (net credit sales ÷ average accounts receivable)). https://openstax.org/books/principles-financial-accounting/pages/9-3-determine-the-efficiency-of-receivables-management-using-financial-ratios: 400,000 ÷ 80,000 = 5 times
- Net credit sales $550,000.00, Accounts receivable at the start $50,000.00, Accounts receivable at the end $80,000.00, Days in the period 365 gives Days sales outstanding (DSO) 43.136364.Source: OpenStax, Principles of Accounting, Volume 1, 9.3 Determine the Efficiency of Receivables Management Using Financial Ratios (number of days’ sales in receivables = 365 ÷ (net credit sales ÷ average accounts receivable)). https://openstax.org/books/principles-financial-accounting/pages/9-3-determine-the-efficiency-of-receivables-management-using-financial-ratios: 43.14 days (rounded)
- Net credit sales $90,000.00, Accounts receivable at the start $25,000.00, Accounts receivable at the end $35,000.00, Days in the period 90 gives Days sales outstanding (DSO) 30, Accounts receivable turnover 3.Source: OpenStax, Principles of Accounting, Volume 1, 9.3 Determine the Efficiency of Receivables Management Using Financial Ratios (number of days’ sales in receivables = 365 ÷ (net credit sales ÷ average accounts receivable)). https://openstax.org/books/principles-financial-accounting/pages/9-3-determine-the-efficiency-of-receivables-management-using-financial-ratios (formula with the quarter's 90 days)
How it works
- Average accounts receivable = (accounts receivable at the start + accounts receivable at the end) ÷ 2
- Accounts receivable turnover = net credit sales ÷ average accounts receivable
- DSO = average accounts receivable ÷ net credit sales × days in the period, which is the days in the period ÷ turnover
OpenStax gives the yearly form with 365 days. For a shorter period, the same formula uses that period's days and sales.
Rules:
- Net credit sales must be more than $0. Receivables are $0 or more. The days in the period are a whole number from 1 to 366.
- If you leave the starting balance empty, the average is the ending balance alone.
- An average of $0 gives no answer. A result too large or too small to show as a number also gives no answer.
- Each amount is at most $1 quadrillion. The arithmetic is exact on the decimals you type. Both results show to 2 decimals, with halves rounded up.
Assumptions
- The credit sales cover the period whose days you enter, and the two balances are from its start and end.
Worked examples by hand
Billie's Watercraft Warehouse, 2017. Credit sales $400,000; receivables $70,000 and $90,000; 365 days. Average = $80,000. Turnover = 5. DSO = 80,000 ÷ 400,000 × 365 = 73 days.
Company A. Credit sales $550,000; receivables $50,000 and $80,000; 365 days. Average = $65,000. DSO = 65,000 ÷ 550,000 × 365 = 43.14 days (43.136…).
One quarter. Credit sales $90,000; receivables $25,000 and $35,000; 90 days. Average = $30,000. Turnover = 90,000 ÷ 30,000 = 3. DSO = 30,000 ÷ 90,000 × 90 = 30 days.
Other questions people ask
What is DSO?
Days sales outstanding (DSO) is the average number of days a company waits to be paid after a sale on credit. A DSO of 45 means customers pay, on average, 45 days after the sale.
How do I calculate DSO?
Divide the average accounts receivable by net credit sales and multiply by the days in the period. Billie's Watercraft Warehouse had average receivables of $80,000 and $400,000 of credit sales in a year: 80,000 ÷ 400,000 × 365 = 73 days.
How is DSO related to receivables turnover?
DSO is the days in the period divided by the receivables turnover. A turnover of 5 in a 365-day year is a DSO of 73 days. OpenStax calls the yearly figure the number of days' sales in receivables.
Can I work out DSO for a quarter or a month?
Yes. Enter the credit sales for that quarter or month, the receivables at its start and end, and its number of days. $90,000 of sales in a 90-day quarter with average receivables of $30,000 is a DSO of 30 days.
What is a good DSO?
Compare DSO with your payment terms. If you give customers 30 days to pay, a DSO near 30 means most pay on time. A DSO that climbs from one period to the next means collections are slowing.
Should I use average or ending receivables?
The average of the starting and ending balances matches sales made over the whole period. If you only have the ending balance, leave the starting box empty and the calculator uses the ending balance.