Days Sales Outstanding (DSO) is a measure of how efficiently and quickly a company converts credit sales into cash and how much of its credit sales are tied up unproductively as accounts receivable. The lower the number, the more efficient the company is, and the less of its cash remains tied up as accounts receivable. It is a simple calculation. How to Calculate your Days Sales Outstanding (DSO) Days Sales Outstanding (DSO) DSO can be calculated monthly, quarterly and yearly. DSO= Total Receivables (billed charges)/Total net payments X # of AVG days in month (on average there are 30 days in a month). Informational: Average DSO for choice clients is around 63 days.
atuljadhavnetafim
Active Member
i Hope you know the method of to calculate Day Sales outstanding (DSO) from countback method
i have tryied with formula but not get answer in single cell
i explan here what is the method of DSO with count back method
My Oct Nov and Dec Sales Are 150 100 250 Respectively
and my Dec closing Account receivable (AR) is 400
now in formual we are deduct last month sale from Account receivable till the Account Receivable is nill
for example first i deduct 250 (Dec Sale) from 400 (AR) and the balance is (150) so i will take 30 days, then i will deduct 100 (Nov Sale) the balance is (50) so i will take 30 Days, now my AR is less than Oct sale so i will devide (50/150)*30= 10 Days, so i my resul is (30+30+10)= 70 DSO
i need formula so i can pate in Dec month and get the 70 Days,
i need DSO for whole year so i need last 6 to 9 month Sales figure and Closing AR (both i have)
i hope you understand the method, and will make some formula to calculate in single cell...
also this formula wokring in prev month, i have closing AR for whole year
Best of luck, if i get it i will be happly excel lover among this forum..
Days Sales Outstanding (DSO):
Days Sales Outstanding is also called the average collection period or days’ sales in receivables, measures the number of days it takes a company to collect cash from its credit sales.
Alternatively, it displays how well a company can collect cash from its customers. The quicker cash can be collected, the faster this cash can be used for other tasks.
Dso Calculation Template Excel Template
It should be remembered that both cash flows and liquidity increase with a lower day’s sales outstanding measurement.
Days Sales Outstanding Definition:
Days’ sales outstanding ratio (also called average collection period or days’ sales in receivables) is used to measure the average number of days a business takes to collect its trade receivables after they have been created. It is an activity ratio and gives information about the efficiency of sales collection activities.
Keep reading I will tell you how you will next how Days sales outstanding calculate and its usage.
You may also read to like:
Formula Used to Calculate DSO:
The DSO ratio is calculated by dividing the ending accounts receivable by the total credit sales for the period and multiplying it by the number of days in the period. Frequently this DSO is calculated at the end of the year and multiplied by 365 days.
An example of Daily sales outstanding:
The data is taken from the financial statement of TOYO Co for the year ended 31 Dec 2014 are as follow:
Using the above illustration, we can determine that during the end of year 31 Dec 2014 it took TOYO an average of 18.82 days to collect revenue receipts from its trade debtors.
Dso Calculation Template Excel
Scrutiny/ Analysis of Day Sales Outstanding:
Dso Calculation Template Excel Download
The lower value of Days Sales Outstanding is favorable whereas a higher value is unfavorable. Though it is more expressive to create monthly or weekly trend of DSO. Any major increase in the trend is unfavorable and shows inefficiency in credit sales collection.
Problem With Days Sales Outstanding Example
Method to calculate days sales outstanding in excel
dso calculation template excel
Dso Calculation Template Excel File
If you want to learn more about Day’s Sale Outstanding you can visit.