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How to calculate days sales outstanding (DSO)
Excel & Google Sheets
=IF(B2<=0,"Not defined",A2/B2*C2)✓
Verified example
Computed by a real spreadsheet engine on the sample data below.
| Average accounts receivable | Net credit sales | Days in period |
| 45000 | 150000 | 90 |
=IF(B2<=0,"Not defined",A2/B2*C2)→27
Both expressions are checked against an independently calculated expected result in HyperFormula. This is a sample execution check, not native Excel or Google Sheets certification.
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Step by step
- 1Use comparable receivables and net credit sales for the same entity, currency and reporting period.
- 2Put average accounts receivable in A2, net credit sales in B2 and the period's actual day count in C2.
- 3Divide 45000 by 150000 to obtain 0.3, then multiply by 90 to obtain 27 days.
- 4The formula reports Not defined when credit sales are zero or negative; it does not convert that invalid denominator into a misleading zero-day DSO.
Tips
- Use a consistent averaging policy for receivables, such as an agreed daily average or opening/closing average. An ending-balance convention produces a different measure and should be labelled.
- This aggregate ratio is not invoice-level ageing or a payment forecast. Seasonality, credit notes and changes in sales mix can affect comparisons.
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Frequently asked
Should cash sales be included?
This worked convention uses net credit sales because they create receivables. Keep the organization's reporting definition explicit and consistent.
Is zero DSO a safe fallback for zero sales?
No. The ratio has no defined value with a zero denominator; investigate or report it as unavailable.
Sources and compatibility
Reviewed 2026-09-16