What ratio measures how many days on average a company takes to collect cash from credit sales customers?
ADays Sales Outstanding (DSO)
BCash Conversion Period
CDays Inventory Outstanding (DIO)
DDays Payable Outstanding (DPO)
Explanation
* Days Sales Outstanding (DSO) = (Accounts Receivable / Total Credit Sales) * 365.
* Measures average collection period efficiency.
* Higher DSO indicates delayed customer payments or weak credit collection policies.
Exam Relevance
- Topic: Financial Statement Analysis
- Subtopic: Receivables Management
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