A/R Days Calculator (DSO)

Finance

The A/R Days Calculator finds days sales outstanding (DSO) — how long, on average, it takes to collect payment after a sale. The formula used is: A/R Days = (Accounts Receivable ÷ Revenue) × Days in Period.

Formula

A/R Days = (A/R ÷ Revenue) × Days
  • The A/R Days Calculator updates instantly as you change receivables, revenue, or the period length.
  • Formula: A/R Days = (Accounts Receivable ÷ Revenue) × Days in Period
  • Input definitions: • Accounts Receivable: money owed to you by customers at period end • Revenue: sales over the period (use credit sales if available) • Days in Period: number of days the revenue covers (365 for a year)
  • A/R days, or days sales outstanding (DSO), shows the average collection time for receivables.
  • A lower number means you collect cash faster; a rising figure can signal slow-paying customers.
  • For best accuracy, use credit sales rather than total revenue, since cash sales are not part of receivables.

Example Calculation

Inputs
  • Accounts Receivable (PKR): 500000
  • Annual Revenue (PKR): 10000000
  • Days in Period: 365

With receivables of 500,000, annual revenue of 10,000,000, and a 365-day period: A/R Days = (500,000 ÷ 10,000,000) × 365 ≈ 18.25 days.

Frequently asked questions

What are A/R days?
A/R days, also called days sales outstanding (DSO), is the average number of days it takes to collect payment after a credit sale.
How is it calculated?
A/R Days = (accounts receivable ÷ revenue) × days in the period.
What is a good A/R days figure?
Lower is generally better, but it depends on your industry and credit terms. Compare it to your payment terms (e.g. net 30).
Should I use total revenue or credit sales?
Credit sales give a more accurate result, since cash sales never become receivables. Use total revenue only if credit sales are unavailable.
Why does a rising A/R days matter?
It suggests customers are paying more slowly, which can strain cash flow and may point to collection or credit issues.