Refer to the balance sheet and income statement and calculate this formula: accounts receivable/(revenues/number of days in the reporting period). The absolute DSO number is less important than the trend in DSOs. Falling DSOs indicate a company is collecting its outstanding accounts faster than before, whereas rising DSOs may indicate that the company has extended easier credit terms to customers to close deals and boost revenues. However, this practice merely steals revenue from future periods and may lead to revenue shortfalls. In an industry where demand can change quickly, rising DSOs are
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