DSO calculator
- Formula
- (Ending AR ÷ Credit sales for the period) × Days in the period
DSO = (Ending AR ÷ Credit sales) × Days in the period90 for a quarter, 365 for a year.
Days sales outstanding
36.0 days
How it’s worked out
- 1(Ending AR ÷ credit sales) × days($600,000 ÷ $1,500,000) × 9036.0 days
Runs in your browser; nothing you type is sent anywhere. Amounts in US dollars.
Worked on a real month of books
Northwind Traders, Inc., September 2026 (accrual basis, USD), the month the free course is taught on. Credit sales are every invoice debited to receivables in the month; the cash sale is left out. Every figure is read off the course's posted ledger, not typed.
- 1ReceivablesEnding accounts receivable$8,000
- 2Credit salesInvoices raised on credit$22,000
- 3DSO($8,000 ÷ $22,000) × 3010.9 days
See the statements these come from in the course.
How to read it
DSO converts the receivables balance into days of sales. If customers pay on 30-day terms and DSO is 52, collections are running three weeks late on average.
It moves with the period chosen and with the timing of large invoices near month-end, so watch the trend more than any single figure.
Common mistakes
- Dividing by total sales, including cash sales, which understates DSO.
- Comparing a 30-day period's DSO with a 90-day period's without matching the days.
Questions
- What does DSO mean?
- Days sales outstanding: how many days of credit sales are still uncollected at the period's end.
- What is a good DSO?
- Close to the payment terms offered. A DSO well above terms means customers are paying late.
Read it with
The metrics read alongside this one, and the terms it is confused with.
- Accounts payable vs accounts receivableAccounts payable is money the company owes to its suppliers; accounts receivable is money its customers owe it — a liability on one side of the balance sheet and an asset on the other.Compare
- DSO vs DPODSO measures how many days of sales are still uncollected; DPO measures how many days of purchases are still unpaid — together with inventory days they make the cash conversion cycle.Compare
- DPO calculatorDPO is a liquidity and working-capital metric, calculated as (Ending AP ÷ COGS for the period) × Days in the period.Calculator
- Cash conversion cycle calculatorCCC is a liquidity and working-capital metric, calculated as DSO + DIO − DPO.Calculator
- Receivables turnover calculatorReceivables turnover is a liquidity and working-capital metric, calculated as Credit sales ÷ Average AR.Calculator
- DSODSO is a liquidity and working-capital metric, calculated as (Ending AR ÷ Credit sales for the period) × Days in the period.Term
The formula is the one the glossary states, and the arithmetic is unit-tested. A ratio with nothing to divide by shows a dash — undefined is not zero. General information, not financial advice.