In finance, DSO (Days Sales Outstanding) is a crucial metric used to assess the efficiency of a company’s credit and collections policies. It measures the average number of days it takes for a company to collect payments from its customers after making a sale on credit. A lower DSO typically indicates faster cash conversion and better liquidity management, whereas a higher DSO may suggest potential cash flow challenges or inefficiencies in receivables management. This metric is essential for financial analysis and helps businesses optimize cash flow and working capital management strategies.
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