Accounts Receivable Days (DSO) Calculator
From accounts receivable and annual revenue, work out how many days on average it takes to collect cash from sales.
Input Data
Results
At a glance:A/R Days (DSO) = accounts receivable / annual revenue x period days (usually 365). It measures collection speed and cash-flow health. Shorter is generally better; compare with your credit terms. Reciprocal of receivables turnover.
Formula
A/R Days = accounts receivable / annual revenue x period days (usually 365).
A/R Days = 365 / receivables turnover (reciprocal).
How to Use
- Enter the accounts receivable balance.
- Enter annual revenue.
- Confirm the period days (365 for a year) and view A/R Days.
FAQ
What is the difference between A/R Days and average collection period?
Same concept. Strict average collection period uses net credit sales as the denominator; A/R Days often uses total revenue for convenience. If sales are almost all credit, they are close; with large cash sales, total revenue overstates the days. Keep the basis consistent.
Is fewer days always better?
Generally yes — faster cash, healthier cash flow, lower bad-debt risk. But tightening credit too hard can hurt customer relations and sales. Aim to keep A/R Days around or just below your credit terms.
How does A/R Days relate to turnover?
They are reciprocals. Receivables turnover = revenue / receivables (how many times a year); A/R Days = 365 / turnover (days per cycle). Higher turnover means fewer days.
Should I use total revenue or net credit sales?
Strictly, only credit sales create receivables, so net credit sales is the correct denominator. This tool uses total revenue for convenience — fine if mostly credit; with large cash sales it understates true collection time. Use credit sales if available, and keep the basis consistent when comparing.
How does A/R Days relate to the cash conversion cycle (CCC)?
A/R Days is one of three CCC components: CCC = DIO (inventory days) + DSO (A/R Days) - DPO (payables days). It captures the 'collection' leg. Shorter A/R Days means revenue turns to cash faster, shrinking the CCC and easing working-capital pressure. Improve A/R Days, extend DPO and shorten DIO to free cash.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.