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The company's accounts receivable has decreased while total sales has remained constant. o Which of the following would explain a company's day sales outstanding ratio rising from 27 to 38? The company's accounts receivable has increased while total sales has remained constant.
What causes DSO to increase?A higher DSO is a sign that your customers are taking longer to pay, which in turn means you have to wait for the much-needed funds to be invested in business operations. It could also mean that your sales team may not be following up and communicating effectively with customers or sending them payment reminders.
What is a good DSO ratio?Why Is DSO Important? A high DSO number can indicate that the cash flow of the business is not ideal. It varies by business, but a number below 45 is considered good.
How to Calculate days of sales outstanding?You can calculate DSO by taking your Current Accounts Receivables Balance, dividing it by your Credit Sales Revenue During Measured Period, then multiplying that number by the Number of Days in Measured Period.
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