Days Sales Outstanding (DSO)

Formal

‘Days Sales Outstanding’ - referring the amount of money tied in up in debtors (receivables) expressed in terms of monthly sales levels. Calculated as; (Debtors or receivables / Turnover) x 365 days.

Real-world Example

A company has $500k in unpaid invoices against $6M in annual revenue. That works out to a DSO of about 30 days - on average, it takes a month to collect payment after a sale.