Glossary
Days Sales Outstanding (DSO)
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Measures the average number of days it takes a company to collect payment after a sale has been made, a reflection of the efficiency of the company’s collections and credit terms. It is a critical component in determining the liquidity of the firm’s receivables and managing cash flow. A lower DSO value indicates that the company is able to quickly turn sales into cash, which is vital for maintaining operational liquidity and reducing credit risk.