N/APosted on - 06/01/2013
I have realized we can do dso analysis in excel (Days Sales Outstanding) by taking average accounts receivable during the month / net credit sales during the month and multiplying by the number of days (30 days). I can see there could be an accounts receivable if the business has its own credit arrangements with customers, however I don't understand how the DSO formula works?
We can perform dso analysis in excel, but how does it work?
Let me put the explanation into an analysis Days’ Sales Outstanding (DSO) Ratio it is an activity ratio which gives you the data about how efficient your sales collection activities is. It means the lower value of DSO the better and it is much favorable for your business. It is best to make monthly or even weekly trend so you can have a better picture on where your business is.