Days Sales Outstanding (DSO) Calculator

How it is calculated

The tool computes DSO = (AR ÷ S) × D. AR is accounts receivable at the end of the period (currency), S is credit sales for the same period (same currency) and D is the number of days in that period. The currency cancels out, so only the ratio matters; the answer is in days, rounded to two decimals.

If you leave the days field empty, zero or negative, the tool uses 365. Sales must be greater than zero and receivables cannot be negative, otherwise there is no result. Use credit sales where you can: cash sales never create a receivable and make DSO look better than collections really are.

Common mistakes

• Using the wrong day count for the period. For a quarter of sales, enter 90 (or 91 or 92), not 365, or DSO will be about four times too small.
• Mixing a year-end receivables balance with sales from a different period. Both figures must cover the same window.
• Including cash sales or VAT inconsistently. If receivables include VAT, sales should include it too; otherwise the ratio is distorted.
• Comparing DSO across businesses with different payment terms. A DSO of 45 is poor on net-30 terms but fine on net-60.
• Using a single month-end balance in a seasonal business. A peak or trough balance can mislead; an average balance is more representative.