Equity Research
Worked DSO example: receivables go from $50M to $70M while quarterly revenue goes from $90M to $100M. What do you conclude?
Model answer
Days sales outstanding = receivables / revenue x days in period. Before: 50 / 90 x 90 = 50 days. After: 70 / 100 x 90 = 63 days. Revenue grew about 11% but receivables grew 40%, pushing DSO up 13…
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