How Do You Calculate DSO

To calculate DSO (Days Sales Outstanding), first determine the average accounts receivable by adding the beginning and ending balances of accounts receivable and dividing by two. Next, divide this average accounts receivable by total credit sales over a specific period (such as a month or a year) and multiply by the number of days in that period (e.g., 30 days for a month or 365 days for a year). The resulting figure represents the average number of days it takes for a company to collect payments from its credit

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