What does "DSO" stand for in financial terms?

Days Sales Outstanding (DSO) is a financial metric that measures the average number of days it takes for a company to collect payment after a sale has been made. It is an important indicator of a company’s efficiency in managing its accounts receivable and cash flow. A lower DSO indicates that the company collects its receivables quickly, which is generally favorable for liquidity and working capital management.

Employing DSO helps businesses assess their credit policies and collection processes, enabling them to identify trends over time or compare their performance to industry standards.

In contrast, the other options do not accurately represent the financial metric being referred to as DSO. Understanding this terminology is crucial for professionals in finance and accounting, as it provides insights into operational efficiency and can directly influence financial strategy.