2017-01-10 00:00:00 Finance and Accounting English Learn what days sales outstanding is and how to interpret it. Review the days sales outstanding formula and an example calculation. https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/01/08213812/merchant-conducts-credit-transaction-starting-days-outstanding-sales-count.jpg What is Days Sales Outstanding?

What is Days Sales Outstanding?

0 min read

Days sales outstanding measures the number of days it takes a business to collect cash from sales made on credit. The value shows the efficiency of the business’ collections department. It is also called the average collection period or days sales in receivables. The formula is: Days sales outstanding = accounts receivables / total credit sales x number of days. For example, assume in January that a business made $450,000 in sales and had $300,000 in accounts receivables. The number of days in January is 31, so the days sales outstanding is: $300,000 / $450,000 x 31 = 20.67 days. The lower the value of days sales outstanding, the faster the company is collecting the amounts due on credit sales.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Identify and Overcome Blockages in Your Sales Funnel

When your vacuum cleaner stops working what do you do? Unclog the…

Read more

Reap Steady Business Growth With Future-Oriented Sales Tracking

If you own or run a small business, you know that sales…

Read more

Helping Small Businesses Prepare Their Budget for the Fair Workplaces, Better Jobs Act

In 2017, the Ontario government signed the Fair Workplaces, Better Jobs Act…

Read more