McDowell Industries sells 3/10 net 30. Total sales for the year are $912,500. Forty percent of the customers pay on the tenth and take discounts; the other 60% pay on average 40 days after their purchase. What are the day's sales outstanding?
Day Sales Outstanding:
DSO is a measure or calculation of the number of days it takes on average for the company to collect all its receivables after product sales. This helps the company to prepare in advance for crisis situations.
Answer and Explanation:
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fromChapter 22 / Lesson 42
An operating cycle consists of lead time, production time, sales time, delivery time, and cash-collection time. Learn the definitions of the parts of the operating cycle, how long the operation cycles are for different industries, and the formula used for calculating the operating cycle in accounting.