What is Days Sales Outstanding? 

Days sales outstanding is the average number of days it takes a company to collect a customer receivable. In short, it’s the amount of time it takes to collect a credit sale. Days sales outstanding is also called the average collection period, and it can be calculated by dividing 365 by the company’s receivables turnover.
Days Sales Outstanding = 365 / Receivables Turnover
Days Sales Outstanding can also be calculated by dividing average net accounts receivable by daily credit sales.
Days Sales Outstanding = Average Net Accounts Receivable / Daily Credit Sales
To find the AVERAGE net accounts receivable, you just add the net accounts receivable from the beginning of the year to the net accounts receivable at the end of the year and divide by two. Note that the "net" accounts receivable is the amount of trade accounts receivable after subtracting the allowance for uncollectible accounts.
To find total credit sales, you can usually just take the net sales figure from the company’s income statement. Unfortunately, some companies report a single sales figure that includes both credit sales and cash sales. In such cases, it might be impossible to calculate total credit sales.
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