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Hello,
I have a question regarding DSO calculation. What figures (including or excluding discounts) should I use for DSO calculation?
As a rule, we should calculate DSO for AR balance which we are going to collect. It means that both AR and sales should include all amounts of discounts, rebates and Credit-Notes which we will give to our customers.
The problem is that we have a customer that always pays in time, say, within 120 days. If I use gross figures of AR and sales, I will get these 120 days. But for net figures, it does not work – DSO is equal to 130 days which is incorrect. It is due to timing in providing of discounts.
Could you please advice me on this topic? How do you calculate DSO in similar cases?DSO is not an abbreviation that is used in ACCA exams (or in the UK at all) and so I have no idea what you are asking about!!
(Have you watched the free lectures for Paper F9? They are a complete course and cover everything needed to pass the exam well.)
Hi, this question is not about ACCA exams but about your real experience in real business.
Days sales outstanding (DSO) is a measure of the average number of days that a company takes to collect revenue after a sale has been made.
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