Days Sales Outstanding
Definition
The average number of days it takes a company to collect payment after a sale is made.
Explanation
DSO measures the efficiency of a company's accounts receivable collection. A DSO of 45 means customers take an average of 45 days to pay. Rising DSO can signal deteriorating credit quality of customers, aggressive revenue recognition (booking sales before cash is received), or inefficient collection processes. For SaaS companies, DSO should be relatively stable or declining. A sudden DSO increase is a yellow flag that analysts and the Stoquity AI engine monitor closely.
Formula
DSO = (Accounts Receivable / Revenue) × Days in Period
How Stoquity Uses This
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