This days sales outstanding calculator can be used to calculate the average number of days credit a business is giving to its customers.
Accounts receivable represent amounts owed to a business for goods sold on account to customers. In order to monitor the level of accounts receivable and the collection of receivables it is useful to calculate how many days sales the accounts receivable represents. This value is referred to as days sales outstanding (DSO) or days sales in accounts receivable, and shows the average number of days the customers are taking to pay the business for sales made to them on account.
Days Sales Outstanding Formula
Days sales outstanding is calculated using the days sales outstanding formula, which divides accounts receivable, taken from the balance sheet, by the average daily sales, taken from the income statement.
Using the Days Sales Outstanding Calculator
The Excel days sales outstanding calculator, available for download below, calculates the days of sales outstanding by entering details as follows:
- Enter the sales. This is the value of sales taken from the annual accounts or management accounts.
- Enter the period. This is number of days in the period, for annual accounts 365 days is used. The days sales calculator calculates the average daily sales for the period.
- Enter the accounts receivable. This is the accounts receivable (debtors) taken from the balance sheet of the accounts. If opening and closing balances are available, then the average accounts receivable balance can be used. The days sales outstanding calculator calculates the average days sales outstanding.
DSO Calculator Download
The DSO calculator is available for download in Excel format by following the link below.
The days sales outstanding figure calculated by this template can be used as one of the inputs for our Financial Projections Template, which provides the financial section for a business plan.
Users use the days sales outstanding spreadsheet to calculate dso days at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of days sales outstanding forecasting software that you might use when drawing up a business plan. It is purely illustrative of a days sales outstanding formula calculator. This is not intended to reflect general standards or targets for any particular company or sector. If you do spot a mistake in the days sales outstanding business plan template, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.