DSO Formula

DSO = Receivables / (Net Annual Sales on Credit / 360)

Example

Company "X" is a sports store. In 2018, it made $10,000 of its $15,000 in sales on credit, and the 2018 annual report included a balance sheet listing $7,000 of receivables

Then using the formula above, we can calculate Company "X" DSO as follows

DSO = $7,000 / ($10,000/360)

DSO = 252 days