TaxTips.ca
Canadian Tax and
Financial Information
Days Sales Outstanding

Ads keep this website free for you.
TaxTips.ca does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

Looking for US tax information?
See
USTaxTips.net

Need an accounting, tax or financial advisor? Look in our Directory.      Stay Connected with TaxTips.ca!      Internet Explorer - Use compatibility view for calculators to work properly!

Home
What's New
Calculators
Personal Tax
Business
Sales Taxes
Free in 30!
Financial Planning
RRSP RRIF TFSA
Real Estate
Stocks Bonds etc.
Seniors
Disabilities
Canada
Alberta
British Columbia
Manitoba
Ontario
Quebec
Saskatchewan
Atlantic Provinces
Territories
Federal Budget
Provincial Budgets
Statistics etc.
Glossary
Site Map
Directory
Advertise With Us
Contact Us/About Us
Links & Resources



Glossary  -> Days sales outstanding ratio

Days Sales Outstanding / Average Collection Period

Also called average collection period, the days sales outstanding ratio is calculated as

trade accounts receivable balance x 365
annual credit sales

The trade accounts receivable amount used in the ratio should be the amount before any deduction for uncollectible accounts.

The following is an example of the calculation:

Total annual credit sales $120,000
Year end trade accounts receivable $30,000
Day's sales outstanding = 30,000 x 365 / 120,000 = 91.25

For a firm with terms of net 30 days, days outstanding of 91.25 would indicate a severe problem in the collection of accounts receivable.

See also accounts receivable turnover and aged accounts receivable.

Revised: February 08, 2017

 

Copyright © 2002 - 2017 Boat Harbour Investments Ltd. All Rights Reserved  See Reproduction of information from TaxTips.ca

Facebook  | Twitter  |  Google + |  Monthly Newsletter Sign-up  What’s New E-mail Notification RSS News Feed
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.