Dr. Paul Borosky, DBA, MBA
Business Consultant & Author
Guide 27 of 34 · Financial Ratios
How to Calculate Days Sales Outstanding
A sale is not cash. DSO counts the days in between.
Every day a customer waits to pay is a day the company is lending them money for free. Days sales outstanding turns that wait into one number you can track. Apple’s has crept up nine days in three years. This guide shows the formula, the math, and what the trend means.
Last Updated: 10/27/2026 · Written by Dr. Paul Borosky, DBA, MBA
The Short Answer
What Is Days Sales Outstanding?
Textbook Definition
Days sales outstanding (DSO) estimates the average number of days it takes a company to collect payment after a sale. It equals average accounts receivable divided by average daily sales.
In Plain English
How long, on average, do customers take to pay? Lower is better, because cash comes in sooner and can go back to work. A rising DSO means money is sitting in other people’s pockets longer.
Days Sales Outstanding
Average Accounts Receivable ÷ (Annual Sales ÷ 365)
Apple, fiscal 2025: 61 days
Receivables come from the balance sheet. Average receivables means this year plus last year, divided by two, so Apple’s trend starts in 2022.
One Real Company
Apple’s DSO, 2022 to 2025
Receivables grew faster than sales. Sales rose about 6% from 2022 to 2025. Average receivables rose about 24%. The result: nine more days to get paid.
| Line | 2025 | 2024 | 2023 | 2022 |
|---|---|---|---|---|
| Average accounts receivable | 69,600 | 63,614 | 60,959 | 56,219 |
| Annual sales | 416,161 | 391,035 | 383,285 | 394,328 |
| Daily sales (sales ÷ 365) | 1,140 | 1,071 | 1,050 | 1,080 |
| Days sales outstanding | 61.04 | 59.38 | 58.05 | 52.04 |
| Receivables turnover | 5.98 | 6.15 | 6.29 | 7.01 |
Source: Apple Form 10-K filings as analyzed in the book. $ millions. Receivables include vendor non-trade receivables.
The Method
How to Calculate and Read DSO in 5 Steps
Average the receivables.
Add this year’s and last year’s accounts receivable and divide by two. Apple’s 2025 average is $69.6 billion.
Find daily sales.
Divide annual sales by 365. Apple sold about $1.14 billion a day in fiscal 2025.
Divide.
Average receivables divided by daily sales gives DSO in days. Apple: 61.
Read the trend.
Falling is better. Apple went 52, 58, 59, 61. Not alarming, but a steady climb ties up cash.
Check the business model.
Selling to consumers usually means fast payment. Selling to big companies on contract terms means slower. Compare like with like.
Two Sister Ratios
The book pairs DSO with two more timing ratios. Average days in inventory shows Apple holds product only about 11 days. Average days payable shows Apple takes about 115 days to pay its own suppliers. Collect in 61, pay in 115: Apple is using its suppliers’ money for free. That is bargaining power on a financial statement.
Compare It
Apple vs. Microsoft: Who Gets Paid Faster?
| Latest fiscal year | Apple | Microsoft |
|---|---|---|
| Receivables turnover | about 6 times | about 4 times |
| Collection speed | faster | slower |
| Days to pay suppliers | about 115 | 3 to 4 months |
Microsoft’s fiscal year ends in June, Apple’s in September.
Microsoft signs large enterprise contracts on longer payment terms. Much of Apple’s business is paid on the spot. Slower is not a red flag for Microsoft. It is the nature of selling to big organizations.
The Full Timeline
Collect in 61 Days, Pay in 115: Apple’s Cash Timeline
DSO is one of three timing ratios in the book. Put them side by side and you see how long cash is tied up from the day Apple buys parts to the day a customer pays.
| Timing ratio | 2025 | 2024 | 2023 | 2022 |
|---|---|---|---|---|
| Days in inventory | 10.7 | 11.8 | 9.6 | 9.4 |
| Days sales outstanding | 61.0 | 59.4 | 58.1 | 52.0 |
| Days payable | 115.5 | 113.6 | 107.3 | 97.8 |
| Inventory + DSO − payable | −43.8 | −42.4 | −39.6 | −36.4 |
Source: the book’s timing ratios. The last row is simple arithmetic on those three lines.
A negative number means Apple collects from customers, on average, weeks before it pays its own suppliers. For most companies that gap is positive, and it has to be funded with cash or a credit line. For Apple, suppliers fund it. The rising DSO trims that advantage a little each year, which is exactly why analysts watch it.
Beginner Traps
What Do Beginners Get Wrong About DSO?
- Using year-end receivables instead of the two-year average.
- Forgetting the 365 and dividing receivables by annual sales.
- Comparing a consumer brand to an enterprise seller.
- Calling a one-year jump a crisis without checking the trend.
- Ignoring vendor non-trade receivables when they are material.
- Reading DSO alone without days payable beside it.
How the Book Grades Apple’s Collection and Payment Speed
From the Book
What the Rising Number Says
Asset Ratios · Days Sales Outstanding
Slower Collections
A rising days-sales-outstanding number means Apple is taking a little longer, on average, to collect from its customers than it used to.
DSO, inventory days, payable days, and six more asset ratios, all on Apple, all graded. It is in the book.
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For a small business, slow-paying customers can sink payroll. The owner playbook is in how to get customers to pay on time. If collections are already squeezing your cash, Dr. Paul helps owners fix it through fractional CFO services.
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Days Sales Outstanding Questions
What is a good DSO?
What is the formula for days sales outstanding?
How is DSO related to accounts receivable turnover?
Why did Apple’s DSO go up?
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Related Guides
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Written by Dr. Paul Borosky, DBA, MBA, business consultant, author, and adjunct finance instructor with an MBA focused in finance.
This page is for general educational purposes only. It is not investment, financial, tax, accounting, or legal advice, and nothing here is a recommendation to buy or sell any security. Apple and Microsoft figures come from their public filings as analyzed in the book. Apple and Microsoft are trademarks of their respective owners, and this page is not affiliated with or endorsed by either company.