Daily Sales Outstanding (DSO)
Corporate Credit Analysis glossary · Financial Statement Analysis & Cash Flow Dynamics
Definition
Receivables divided by average daily revenue; a measure of collection speed. Rising DSO can signal customer credit deterioration or aggressive revenue recognition.
Daily Sales Outstanding (DSO) in plain English
When a company sells stuff "on credit" (deliver now, get paid later), DSO tells you roughly how many days it waits to actually collect that cash. You take the money customers still owe (receivables) and divide by how much the company sells per day, so it's literally "days' worth of sales sitting unpaid." If this number keeps climbing, it's a warning: either customers are struggling to pay, or the company is booking sales it hasn't really collected. It's like a friend who keeps saying "I'll pay you back" — the longer the average wait stretches, the more you worry the money isn't coming.
Also called: DSO
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