Receivable Days

Explanation: Receivable Days, also known as Days Sales Outstanding (DSO), represents the average number of days it takes for a company to collect payment from its customers after making a sale. It measures the efficiency of a company’s credit and collection policies, indicating how quickly it converts credit sales into cash. Lower Receivable Days suggest faster collections and better cash flow management.

Example: Maruti Suzuki had Receivable Days of 8 in FY23, indicating that, on average, it takes approximately 8 days for the company to collect payments from its customers. A good Receivable Days range varies by industry and company size but typically falls between 30 to 60 days. However, industries with shorter sales cycles, such as retail or technology, may have lower Receivable Days, while industries with longer sales cycles, such as manufacturing or construction, may have higher Receivable Days. Monitoring Receivable Days helps assess a company’s credit risk, liquidity, and overall financial health.

You can view the Receivable Days on Radar under Cash Conversion Cycle in the Ratios section.