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Calculating Days sales outstanding (DSO), Capital Released.

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Lamar Lumber Company has sales of $10 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $2 million. What is Lamar's DSO, what would it be if all customers paid on time, and how much capital would be released if Lamar could take actions that led to on-time payments?

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Solution Summary

MS Word document contains about 300 words and a detailed explanation and calculation of Days sales outstanding (DSO) as it pertains to on-time payments. This step-by-step explanation and calculation will provide students with great understanding of how DSO relate to amount of capital released.

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