American Electric Power Company Inc (AEP)

Days of sales outstanding (DSO)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Receivables turnover		6.82	6.64	7.41	6.55	8.07
DSO	days	53.51	54.97	49.29	55.70	45.21

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 6.82
= 53.51

The Days Sales Outstanding (DSO) ratio measures the average number of days it takes for American Electric Power Company Inc. to collect its accounts receivable. A lower DSO indicates a faster collection of cash from customers, which is generally favorable as it signifies efficient credit management.

Analyzing the trend of AEP's DSO over the years, we observe some fluctuations in the metric. In 2023, the DSO stood at 47.06 days, showing a slight improvement compared to 2022 when it was 47.77 days. Despite this improvement, the DSO remains relatively high compared to earlier years.

In 2021, the company achieved a lower DSO of 42.20 days, indicating more efficient collections compared to 2020 and 2019 when the DSO was 45.08 days and 39.99 days, respectively. The decrease in DSO from 2021 to 2020 reflects improved accounts receivable management efficiency during that period.

Overall, while there have been fluctuations in AEP's DSO over the years, it is essential for the company to focus on maintaining a low DSO to ensure that cash flows remain healthy and efficient. Continued monitoring and improvements in credit and collection processes can help enhance the company's financial performance.