DSO vs receivables turnover
Receivables turnover is 365 divided by days sales outstanding. A DSO of 45 days is 8.11 turns a year. DSO 30 is 12.17 turns. They are one clock written as a wait and as a rate of turns.
| Days sales outstanding | Receivables turnover | |
|---|---|---|
| Formula | DSO, typed in. Usually receivables over daily sales. | 365 / DSO. |
| First sheet | DSO 45. Plus DIO 60 is a 105 day operating cycle. CCC 75. | 365 / 45 = 8.11 turns. |
| Faster collections | DSO 30. Operating cycle 50 with DIO 20. CCC minus 50 after DPO 100. | 365 / 30 = 12.17 turns. |
| Equal clocks | DSO 40. Operating cycle 80. CCC 40. | 365 / 40 = 9.125 turns. |
| 360 day year | DSO is still 45. Only the invert changed. | 360 / 45 = 8 exactly, a different convention. |
| When you would pick it | The days sitting in the operating cycle. | A turns ranking inside a sector. |
On this page
One clock, two printings
8.11 turns and 45 days are . How receivables turnover works is the invert. How days sales outstanding works is the days. The cash conversion cycle calculator takes DSO as an input and does not compute it from a ledger.
How the operating cycle works is DSO plus DIO. Inventory turnover against DIO is the stock cousin.
Name the year
A 360 day year prints 8 turns on a 45 day DSO. A 365 day year prints 8.11. Mixing them is a fake ranking. This is educational material, not financial advice.
Worked examples
45 days, 8.11 turns
DSO 45, DIO 60, DPO 30. Turnover on a 365 day year?
- Turnover 8.11.
- Operating cycle 105 days. CCC 75 days.
Receivables turnover is 8.11 times a year. DSO is 45. Operating cycle 105 days. CCC 75 days.
30 days, 12.17 turns
DSO 30, DIO 20, DPO 100. Turnover?
- Turnover 12.17.
- Operating cycle 50 days. CCC minus 50 days.
Receivables turnover is 12.17 times a year. DSO is 30. Operating cycle 50 days. CCC minus 50 days.
40 days, 9.125 turns
DSO 40, DIO 40, DPO 40. Turnover?
- Turnover 9.125.
- Operating cycle 80 days. CCC 40 days.
Receivables turnover is 9.125 times a year. DSO is 40. Operating cycle 80 days. CCC 40 days.
Common questions
Which one should I quote?
They are one clock. Quote both, or name which invert you used and whether the year is 365 or 360.
Is a higher turnover always better?
It is a shorter wait. It can also be tighter terms that shrink the book.
Does this page compute DSO from receivables?
No. DSO is an input. This is educational material, not financial advice.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.