The formula used in the calculations is:
\[ \text{Average Accounts Receivable} = \frac{\text{Beginning Accounts Receivable} + \text{Ending Accounts Receivable}}{2} \]
\[ \text{DSO} = \left(\frac{\text{Average Accounts Receivable}}{\text{Sales}}\right) \times \text{Days in Accounting Period} \]
This calculator computes the Days Sales Outstanding (DSO) based on the input values of beginning and ending accounts receivable, sales, and the days in the accounting period. DSO measures the average number of days that it takes a company to collect payment after a sale has been made.
Let's assume the following:
Calculate the average accounts receivable:
\[ \text{Average Accounts Receivable} = \frac{300,000 + 250,000}{2} = 275,000 \]
Calculate the days sales outstanding (DSO):
\[ \text{DSO} = \left(\frac{275,000}{5,000,000}\right) \times 365 = 20.075 \text{ days} \]
Therefore, the DSO is 20.075 days.
