Define days sales outstanding (DSO). What can be learned from it? How is it affected by sales fluctuations?

Define days sales outstanding (DSO). What can be learned from it? How is it affected by sales fluctuations?

Category:
0
0

Define days sales outstanding (DSO). What can be learned from it? How is it affected by sales fluctuations?

Answer and ExplanationSolution by a verified expert
Verified Answer Days sales outstanding are the average number of days that the company takes to collect payment from its debtors. Lower the days sales outstanding, the shorter the time a company t...

Verified Answer

Days sales outstanding are the average number of days that the company takes to collect payment from its debtors.
Lower the days sales outstanding, the shorter the time a company takes to collect receivables.
 
Days sales outstanding indicates how quickly the customers are paying off as well as the average number of sales the company has made during an accounting period.
 
The increase in sales will lead to an increase in the denominator as well as the numerator, but the denominator will increase at a rate higher than the numerator. As a result, days sales outstanding will increase even if customers are paying as quickly as before.

Purchase this answer to view it.
Login or register for free to purchase this solution with PayPal or credit cards securely


Get help with your essays and assignments

Order custom essays from top writers and get a professional paper delivered to your email on time.

Do my Paper