Days Sales Outstanding measures the average number of days it takes a company to collect payment after making a sale. Lower DSO means faster collection. Rising DSO over time may indicate deteriorating receivables quality or loosening credit standards.
DSO = 365 / Receivables Turnover (TTM)
Derived from receivables turnover, which uses TTM revenue divided by average receivables from SEC filings.
A: DSO should roughly match the company's stated credit terms. A company offering net-30 terms should have DSO around 30-45 days. DSO significantly above credit terms indicates collection delays. B2B companies typically have higher DSO (45-90 days) than B2C companies (under 30 days).
A: Rising DSO can indicate the company is extending more generous credit terms to maintain sales, customers are paying more slowly, or receivables quality is deteriorating. It deserves investigation but is not automatically a red flag — seasonal businesses often have naturally fluctuating DSO.
A: DSO is derived from receivables turnover, so any difference in how revenue or receivables are measured propagates into DSO. GeminIQ uses as-filed values for both inputs.