Glossary -> Days sales outstanding ratio
Days Sales Outstanding / Average Collection Period
Also called average collection period, the days sales outstanding ratio is calculated as
trade accounts receivable
balance x 365
The trade accounts receivable amount used in the ratio should be the amount before any deduction for uncollectible accounts.
The following is an example of the calculation:
For a firm with terms of net 30 days, days outstanding of 91.25 would indicate a severe problem in the collection of accounts receivable.
Revised: February 18, 2021
Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved. See Reproduction of information from TaxTips.ca