Align Technology Inc (ALGN)

Days of sales outstanding (DSO)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Receivables turnover		3.69	3.73	4.41	3.73	4.01
DSO	days	98.96	97.75	82.85	97.91	90.98

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 3.69
= 98.96

Align Technology, Inc.'s Days Sales Outstanding (DSO) measures the average number of days it takes for the company to collect payment after making a sale. A lower DSO indicates that the company is able to collect payments more quickly, which is generally favorable as it signifies efficient management of accounts receivable.

Looking at the trend over the last five years, Align Technology has seen fluctuations in its DSO. In 2020, the DSO spiked to 106.89 days, indicating potential challenges in collecting payments efficiently. However, in the subsequent years, there has been a gradual improvement in DSO, with the metric decreasing to 85.38 days by the end of 2023.

The decreasing trend in DSO suggests that Align Technology has been managing its accounts receivable more effectively in recent years, potentially streamlining its credit policies, improving collection processes, or enhancing customer relationships. This trend is a positive sign as it indicates that the company is converting its sales into cash more efficiently and reducing the risk of bad debts.

Overall, Align Technology's DSO trend demonstrates an improving liquidity position and efficient working capital management, which may positively impact the company's cash flows and financial health in the long run.