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DAYS & DAYS360
DatesTwo day counts that disagree on purpose — and DSO changes depending on which you use.
Difficulty
1What is it?
DAYS counts actual calendar days between two dates. DAYS360 pretends every month has 30 days and every year 360, which sounds like a rounding error and is in fact a deliberate convention: bond markets, many loan agreements and a lot of intercompany arrangements are written on it, because it makes every period directly comparable. The two can differ by five days over a single month, and DSO computed on the wrong one is wrong by that much. Which to use isn't a preference — it's whatever the agreement or the policy says.
2What it looks like
DAYS(end_date, start_date) · DAYS360(start_date, end_date, [method])- end_date / start_date
- Note the ORDER is reversed between the two functions: DAYS takes end first, DAYS360 takes start first.
- [method]
- FALSE (default) = the US/NASD convention; TRUE = the European one. They differ only in how they treat the 31st.
3When you use it
- Compute DSO on the day count your policy actually specifies.
- Price a stub period on a loan written 30/360.
- Compare two periods of different real lengths on equal terms.
4See it in action
Change the inputs — the formula and result update live. Prefer the real thing? Download the Excel file and open it in Excel.
Move the dates and watch the two conventions disagree — then watch DSO move with them.
=DAYS(B2, B1) · =DAYS360(B1, B2)DAYS (actual): 59 days → DSO 22.3| A | |
|---|---|
| 1 | Result |
| 2 | DAYS (actual): 59 days → DSO 22.3 |
| 3 | DAYS360: 60 days → DSO 22.7 |
| 4 | The convention moves DSO by 0.4 days |
| 5 | Note the argument order flips between the two functions |
The lime cell holds the formula — click it (or any cell) to see its contents in the bar above, just like Excel. Edit the blue cells to watch it recompute.
5Common errors
Negative answerThe arguments are the wrong way round — DAYS wants END first, which is the opposite of nearly every other date function.Fix: =DAYS(later, earlier). If you keep getting it wrong, subtract instead: later − earlier gives the same number.
DSO is out by several daysOne convention was used to build the number and a different one to check it.Fix: Write the convention in a labelled cell beside the calculation. It's a policy choice, not a formula detail.
#VALUE!A date arrived as text that Excel couldn't parse.Fix: Convert it first — see DATEVALUE.
The 31st behaves oddlyDAYS360's two methods disagree precisely on month-ends that fall on the 31st.Fix: Pass the method argument explicitly rather than relying on the default.
6Better functions & alternatives
- YEARFRAC — The same conventions expressed as a fraction of a year, which is what an interest accrual actually needs.
- NETWORKDAYS — When the unit should be working days rather than calendar ones.
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