← The FP&A libraryPractice · 17 questions →
Cash & working capital
Days sales outstanding
The average number of days between invoicing a customer and collecting the cash — how long receivables sit.
Owned by: AnalystTest band: Analyst
The formula
DSO = Accounts receivable ÷ Revenue × Days in period
In practice
Every day of DSO is a day of revenue sitting in someone else's bank. Cutting DSO by ten days on $10M of annual revenue frees about $270k.
The kind of thing the test asks
- Receivables are $200k and annual revenue is $1.2M. DSO is roughly…