Business FinancesQuestion 499 of 1632
A contractor has annual credit sales of $1,825,000 and an average accounts receivable balance of $250,000. What is the Days Sales Outstanding (DSO)?
a.50 days
b.37 days
c.60 days
d.73 days
Explanation
DSO = (Average Accounts Receivable ÷ Annual Credit Sales) × 365 = ($250,000 ÷ $1,825,000) × 365 = 0.13699 × 365 ≈ 50 days. DSO measures how long it takes to collect from customers; a rising DSO indicates collection problems.
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