Accounts Receivable Days (AR Days) Calculator
Calculate how many days on average it takes a company to collect payment after a sale has been made. Also known as Days Sales Outstanding (DSO).
Formula
AR Days (DSO) = (Accounts Receivable ÷ Net Credit Sales) × Number of Days
Equivalently:
AR Days = Number of Days ÷ AR Turnover Ratio
Where: AR Turnover Ratio = Net Credit Sales ÷ Accounts Receivable
Assumptions & References
- Accounts Receivable used is the ending balance for the period (some analysts use an average of beginning and ending balances for greater accuracy).
- Revenue should ideally represent net credit sales only; cash sales should be excluded if possible.
- A 365-day year is the most common convention; 360-day (banker's year) is used in some industries.
- Lower AR Days indicate faster collections and better liquidity; higher values may signal credit or collection issues.
- Benchmarks vary significantly by industry — always compare against sector peers.
- Reference: Financial Accounting Standards Board (FASB); Investopedia — Days Sales Outstanding (DSO).