Formula

Days Sales Outstanding Formula: Calculating DSO for Forex Trading

4 min read

The Days Sales Outstanding (DSO) formula is a key indicator of a company’s liquidity. It measures how quickly customers are paying off their debts to the company and serves as a valuable tool for Forex traders when they are considering investing in a currency pair. The formula looks at how long it takes a company to collect on its accounts receivable, and helps traders evaluate the company’s liquidity and financial health. When the DSO rate is higher, it usually indicates that the company is having trouble collecting payments from its customers, which can be a sign of difficulty meeting its debt obligations. Therefore, a low DSO rate indicates a financially healthy company and is a positive sign for potential investors.