Definition: What is Days Sales Outstanding (DSO) Ratio?
Days Sales Outstanding ratio is the measurement which is used to measure the number of days a company takes to collect the cash from the company’s credit sales.
So this is used for the measurement of the efficiency and liquidity of the company’s collection department.
In simple work, it measures that, how well the company collects cash from its customers.
The company which can collect cash rapidly can use that cash for other operation of the company.
If the company has a low calculation of DSO then the liquidity and cash flow of the company is greater. You can learn about Days Sales Outstanding Formula | DSO Formula.
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