Days Sales Outstanding (DSO)

DSO measures how long cash takes to arrive after a sale is booked, typically as average accounts receivable divided by daily revenue. It’s less useful as a snapshot than as a trend: a DSO that’s been climbing for a few periods is often the earliest visible sign of collections friction or slipping credit quality, well before it shows up as a cash flow problem.

The calculation also hides a judgment call: which receivables count as “current” versus overdue can shift the number without anything about collections actually changing. See cash conversion cycle for how DSO fits into the broader working-capital picture.