What ratio is accounts receivable divided by total credit sales times 365?

The ratio of accounts receivable to annual credit sales, multiplied by 365, is days sales outstanding (DSO).

DSO expresses receivables in equivalent days of sales. The usual formula is accounts receivable divided by average daily credit sales, or accounts receivable ÷ (annual credit sales ÷ 365). If receivables are $100,000 and annual credit sales are $730,000, DSO is 50 days.

Businesses and analysts use DSO to monitor collection performance, customer payment behavior, and working-capital pressure. A rising DSO may signal slower collections, looser credit terms, weaker customers, or falling sales. A very low DSO is not automatically ideal: strict credit policies can reduce sales as well as receivables.

DSO is often confused with the average time a particular invoice takes to be paid. It is better understood as the number of days of average sales currently represented by outstanding receivables. It also differs from days inventory outstanding and days payable outstanding; together, such measures help build the cash conversion cycle.