The Days Sales Outstanding Ratio, also known as the Average Collection Period or Days Receivables Calculation, is a measure of how quickly a company can collect payments from its customers. It’s calculated by dividing the average accounts receivable balance by the total sales divided by the number of days in a given period. This ratio helps to assess a company’s credit and collection policies, as well as its overall performance in relation to receivable management and cash flow. By tracking this data, businesses can identify any changes or trends that may affect their ability to generate revenue.