Days sales outstanding
How many days pass on average between shipping goods and collecting the money for them.
Formula
Receivables are averaged over the opening and closing balance, revenue is taken for the same period — dividing a point-in-time balance by a flow otherwise makes the figure meaningless.
How to read the number
A lengthening period means the company is lending to its customers for longer: revenue is recognised while the cash is not there yet. This is the first place where deteriorating collections show.
When the metric lies
Where it is used
The metric is calculated across every security in the catalogue and appears on the instrument card, in the multiples table and in the screener.
Also known as: days sales outstanding, receivable days, collection period