| Days' Sales Outstanding - DSO |
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A company's average collection period. Generally calculated as:
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=
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Accounts Receivable
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x Number of Days |
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Sales
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A low figure means the company collects its outstanding receivables quickly.
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This is often used to help determine if a company is trying
to disguise weak sales.
Typically it is looked at either quarterly or yearly (90 or 365 days). A variation is to use only sales made on credit. Also referred to as the collection ratio. |
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Dictionary
