Days Sales Outstanding (DSO)
Average time to collect payment from customers.
Formula
DSO = (Receivables ÷ Revenue) × 365
Real World
When Carillion collapsed in 2018, its DSO had been climbing for years as clients delayed payments on large public contracts, quietly strangling its cash flow long before the headline failure.
Exam Focus
For 'evaluate' questions, compare DSO against industry norms or trend data — a rising DSO over time is more significant than a single-year figure.
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