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Days Sales Outstanding (DSO) Calculator
DSO measures how quickly a company converts credit sales into cash — the faster it collects, the less working capital gets stranded in receivables. Enter accounts receivable and net revenue to compute DSO in days, view AR as a percentage of revenue, and benchmark your result against industry averages.
Enter values in dollars (e.g. 500000 or 500K or 0.5M). Pull Accounts Receivable from the balance sheet and Net Revenue from the income statement for the same period. Match the period selector to the time frame of your figures.
Enter your figures to calculate DSO
Input accounts receivable from the balance sheet and net revenue from the income statement for the same period. The calculator returns DSO in days, AR as a percentage of revenue, and — if you provide an industry average — a better/worse comparison with your sector peers.
RELATED TOOLS
AR turnover calculator — the receivables flip side of DSO →Cash conversion cycle — DIO + DSO − DPO in one number →Days payable outstanding — how long the company takes to pay suppliers →DSO directly compresses or expands free cash flow — see how that flows through to intrinsic value in the discounted cash flow guide.
What Is Days Sales Outstanding?
Days Sales Outstanding tells you how many days, on average, a company waits between making a sale and receiving the cash. It is one of the three components of the cash conversion cycle — the others being Days Inventory Outstanding (DIO) and Days Payable Outstanding (DPO). The formula is simple:
| Term | What it means |
|---|---|
| Accounts Receivable | Money owed by customers for sales already made but not yet collected |
| Net Revenue | Total sales for the period — use the same period as your AR balance |
| Days in Period | 365 for annual, 90 for quarterly, 30 for monthly |
| = DSO | (Accounts Receivable / Revenue) × Days — average days from sale to cash |
A lower DSO means faster collections and a tighter cash conversion cycle. Rising DSO, especially when revenue is flat, is a red flag — it can signal customers in financial trouble, loosened credit standards, or a collections process that needs tightening.
How to Use This Calculator
Enter accounts receivable
Pull the AR balance from the most recent balance sheet. Use the period-end figure — it matches the revenue figure from the same period.
Enter net revenue
Use total revenue from the income statement for the same period as your AR balance. Annual revenue pairs with the year-end AR balance; quarterly revenue with the quarter-end AR balance.
Select the period
Choose Annual (365 days), Quarterly (90 days), or Monthly (30 days) to match your revenue and AR figures. Mixing periods produces a meaningless result.
Add an industry average (optional)
Enter a known industry DSO to see whether your result is better or worse than peers. The calculator shows the delta and a direction badge.
Key Concepts
DSO and the cash conversion cycle
CCC = DIO + DSO − DPO. Every day you shave off DSO reduces the cash conversion cycle by one day — freeing up cash equal to daily revenue. At $10M annual revenue, a 10-day DSO reduction unlocks $274K in working capital.
When rising DSO is a warning
Watch for DSO rising while revenue is flat or falling — that combination signals customers stretching payment beyond agreed terms. It can also mean the company is booking revenue before cash is truly collectible, a classic earnings quality red flag.
Industry context matters
A 45-day DSO is excellent for a healthcare company billing through insurance, but a warning sign for a consumer staples firm selling to retailers on net-30 terms. Always benchmark against the sector — absolute DSO without context is misleading.
AR as % of revenue
AR as a percentage of revenue gives you a snapshot of how much of the company's sales are sitting uncollected on the balance sheet. A rising AR percentage alongside a rising DSO confirms the collections problem is real — not just a timing quirk.
Frequently Asked Questions
What is Days Sales Outstanding (DSO)?
DSO measures how many days a company takes to collect payment after a sale. Formula: (Accounts Receivable / Revenue) × Days in Period. Lower DSO means faster collections and a tighter cash conversion cycle.
How do you calculate DSO?
DSO = (Accounts Receivable / Net Revenue) × Days in Period. Use 365 for annual, 90 for quarterly, 30 for monthly. Example: $500K AR and $4M annual revenue gives (500,000 / 4,000,000) × 365 = 45.6 days DSO.
What is a good DSO?
Below 30 days is Excellent. 30–45 days is Good. 45–60 days is Average. Above 60 days is Concerning. The right benchmark depends heavily on your industry and payment terms.
What is the difference between DSO and AR turnover?
They are inverse views of the same metric. AR Turnover = Revenue / AR. DSO = AR / Revenue × 365. A turnover of 8× equals 45.6 days DSO. DSO is more intuitive for tracking against payment terms; turnover works better for year-over-year efficiency comparisons.
How does DSO affect free cash flow?
Every incremental day of DSO locks up more cash in receivables. Reducing DSO by one day releases cash equivalent to one day of daily revenue — directly improving operating cash flow and free cash flow without changing the income statement.
FINISHED THE NUMBERS?
A calculator gives you one ratio. The report gives you the full picture.
DSO in context — receivables trends, cash conversion efficiency, and whether collections are tightening or slipping — on any public company.
See a sample report →