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In accountancy, days sales outstanding (also called DSO and days receivables) is a calculation used by a company to estimate the size of their outstanding accounts receivable. It measures this size not in units of currency, but in average sales days. Typically, days sales outstanding is calculated monthly.
Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter. The standard way to calculate DSO uses average accounts receivable.
Inventory levels (measured at cost) are divided by sales per day (also measured at cost rather than selling price.) The formula for days in inventory is: D I I = a v e r a g e i n v e n t o r y C O G S / D a y s {\displaystyle DII={\dfrac {average~inventory}{COGS/Days}}} , alternatively expressed as: D I I = I n v e n t o r y A v e r a g e d a ...
the Receivables conversion period (or "Days sales outstanding") emerges as interval B→D (i.e.being owed cash→collecting cash) Knowledge of any three of these conversion cycles permits derivation of the fourth (leaving aside the operating cycle, which is just the sum of the inventory conversion period and the receivables conversion period ...
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