Days Sales Outstanding (DSO)

Efficiency
Updated Apr 2026 • Has calculator

The average number of days it takes a company to collect payment after a sale.

What is DSO?

Days Sales Outstanding (DSO) measures the average time, in days, between making a sale on credit and receiving payment. It is calculated as 365 divided by the Receivables Turnover Ratio. A lower DSO means customers pay faster, improving cash flow. A rising DSO can indicate collection problems, deteriorating customer financial health, or loosened credit terms. DSO is a key component of the Cash Conversion Cycle and is closely monitored in credit-intensive industries.

Formula

DSO = 365 ÷ Receivables Turnover Ratio

Worked Example

Worked example — Apple Inc. (AAPL)

FY2024

Step 1  Receivables turnover: $391,035M ÷ $31,459M = 12.43x
Step 2  DSO = 365 ÷ 12.43 = 29.37 days
Step 3  → Apple collects its average receivable in about 29 days after the sale

Source: Apple 10-K FY2024 (2024-11-01)

Calculate DSO

Revenue divided by average accounts receivable (calculate with the Receivables Turnover calculator)

Days Sales Outstanding

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Not investment advice.

How to Interpret DSO

< 30
Excellent — fast collections, minimal credit risk
30 – 45
Good — standard net-30 payment terms
45 – 60
Average — some collection lag, monitor trend
> 60
High — slow collections, potential credit issues

📚 Working Capital — Complete the path

  1. Cash Conversion Cycle
  2. DIO
  3. DSO
  4. DPO
  5. Asset Turnover
  6. Inventory Turnover
Sources
  1. CFA Institute — Financial Reporting and Analysis, 6th ed., Ch. 9
  2. Investopedia — DSO