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| | The Business Finance,Taxes and Business Operations Network is not currently active and cannot accept new posts | | Calculate Your Sales Days | Views: 1405 | | Aug 24, 2006 7:50 pm | | Calculate Your Sales Days | # | 
Michael Brown | | Many of us are familiar with the term “Days Sales Outstanding” or DSO. For those of you who are not, DSO is a common performance metrics used to evaluate the amount of time it takes to turn a receivable (sale on terms) to cash. The DSO calculation performs as a measure of efficiency in your collection process and as a tool for managing your expenditures and company’s cash flow.
How to calculate your DSO?
DSO = Total Receivable Balance at the end of the period / Total Sales in the Period * The number of days in the period.
Example: Based on a quarterly calculation (90 days)
DSO = Total Receivables (200,000)
Total Sales during Period (450,000)
Days in Period (90)
200,000 / 450,000 = .44 * 90 = DSO of 40 days.
You should feel fairly safe if you DSO is 10 to 15 days within terms. If your DSO is greater than say 45 on net 30 terms you may want to take a look at both your sales and collection process. The DSO calculation is used to evaluate Monthly, Quarterly, or Yearly performance, simply adjust the Sales and Days for the period evaluated
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