Days Sales Outstanding Calculator
Enter your accounts receivable balance and total credit sales for a period to calculate Days Sales Outstanding (DSO) — a key measure of how quickly a business collects payment after making a sale.
How the Days Sales Outstanding formula works
The DSO formula:
DSO = (Accounts receivable / Total credit sales) × Days in period
Step-by-step calculation
- Divide accounts receivable by total credit sales for the period.
- Multiply by the number of days in that period (commonly 365 for annual figures).
Worked example
Accounts receivable of $180,000 and annual credit sales of $2,190,000: DSO = (180,000/2,190,000) × 365 ≈ 30 days — meaning it takes about a month on average to collect payment after a sale.
Frequently asked questions
What's a good DSO?
It depends heavily on industry and payment terms — a business with net-30 payment terms would ideally see a DSO close to 30 days; a DSO significantly higher than stated payment terms can signal collection problems or overly lenient credit policies.
Does DSO include cash sales?
No — DSO specifically measures credit sales (sales made on account, to be paid later), since cash sales are collected immediately and don't contribute to accounts receivable.