What is DSO?
The average number of days it takes to collect payment after a sale is made.
Think of it like this
Like measuring how many days until your paycheck arrives after you've worked - shorter is better.
Formula
DSO = (Accounts Receivable ÷ Revenue) × 365- Accounts Receivable: Money owed by customers
- Revenue: Annual sales
- 365: Days in a year
Why it matters
- Direct measure of collection speed
- Affects cash flow timing
- Lower DSO = faster cash conversion
- Rising DSO can signal problems
What's a good value?
< 30 days
Excellent
Very fast collection
30-45 days
Good
Normal payment terms
45-60 days
Average
Standard for B2B
> 60 days
Slow
Potential collection issues
Real-world example
If DSO increases from 35 to 50 days, investigate whether customers are paying slower.
Evaluate this indicator on 8,000+ US stocks
Download Signal Screener