what is days sales outstanding dso 
days sales outstanding dso is a measure of the average number of days that it takes a company to collect payment for a sale dso is often determined on a monthly quarterly or annual basis to compute dso divide the average accounts receivable during a given period by the total value of credit sales during the same period and then multiply the result by the number of days in the period being measured days sales outstanding is an element of the cash conversion cycle and may also be referred to as days receivables or average collection period investopedia tara anandunderstanding days sales outstanding dso given the vital importance of cash flow in running a business it is in a company s best interest to collect its outstanding accounts receivables as quickly as possible companies can expect with relative certainty that they will be paid their outstanding receivables but because of the time value of money principle time spent waiting to be paid is money lost that said the definition of quickly depends on the business in the financial industry relatively long payment terms are common in the agriculture and fuel industries fast payment can be crucial in general small businesses rely more heavily on steady cash flow than large diversified companies 1dso accounts receivable total credit sales number of days begin aligned text dso frac text accounts receivable text total credit sales times text number of days end aligned dso total credit salesaccounts receivable number of days by quickly turning sales into cash a company has a chance to put the cash to use again more quickly 