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How to calculate Days sales outstanding

The Days sales outstanding formula, with plain worked examples you can check yourself.

Days sales outstanding = AR ÷ Sales × 365

Worked examples

AR = 45000 · Sales = 365000Days sales outstanding = 45
AR = 45000 · Sales = 365000Days sales outstanding = 45
AR = 36000 · Sales = 292000Days sales outstanding = 45

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Cash & Liquidity.

Related terms

Cash flowLiquidityWorking capitalOverdraft

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