MihsabaHow to use
Calculate average collection days from average accounts receivable, net credit sales and period days.
- Enter Average accounts receivable.
- Enter Net credit sales.
- Enter Days in period.
- Calculate, then review the metric definition and comparison limits.
How it is calculated
Example
Average receivables of 90,000 and credit sales of 720,000 over 365 days give DSO of about 45.6 days.
Important notes
Use credit sales rather than total sales when cash sales are material, and match average receivables to the same period.
Worked examples and interpreting results
Average receivables of 90,000 and credit sales of 720,000 over 365 days give DSO of about 45.6 days.
| Case | Calculation | Result |
|---|---|---|
| DSO | 90000 ÷ 720000 × 365 | 45.625 days |
| Receivables share | 90000 ÷ 720000 × 100 | 12.5 % |
How to check the result
Use credit sales rather than total sales when cash sales are material, and match average receivables to the same period.
Frequently asked questions
Is lower DSO always better?
Faster collection usually helps liquidity, but credit terms are part of sales strategy and vary by customer and industry.
Should the inputs use the same period?
Yes. Use figures from the same reporting period and accounting definition so balances and flows remain comparable.
Is the result enough for a decision?
No. The metric summarizes a numerical relationship; compare it with company history, industry context, and accounting or operating policies.