Financial Terms Glossary

DSO

Formal

'Days Sales Outstanding' - referring the amount of money tied in up in debtors (receivables) expressed in terms of monthly sales levels. Calculated as; (Debtors or receivables / Turnover) x 365 days.

Informal

Means 'days sales outstanding' and is a simple measure to describe the amount of cash tied up in receivables (debtors). For example; £300,000 in debtors... is good if annual turnover (income) is £4,000,000 but bad if annual income (turnover) is £300,000. The comparison of amounts owing to turnover shows effectiveness of cash collection techniques.

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