Baxter International Inc (BAX)

Days of sales outstanding (DSO)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Receivables turnover		5.16	5.32	4.50	10.35	11.11
DSO	days	70.80	68.55	81.08	35.25	32.86

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 5.16
= 70.80

Days of Sales Outstanding (DSO) is a key financial ratio that measures the average number of days it takes a company to collect payment after making a sale. A lower DSO indicates that a company is efficient in collecting its accounts receivable, while a higher DSO may suggest potential issues with receivables management or a slower collection process.

Analyzing Baxter International Inc.'s DSO trend over the past five years, we observe fluctuations in the metric. In 2023, Baxter's DSO stood at 66.28 days, a slight increase from the previous year's DSO of 64.22 days. This indicates a longer collection period for accounts receivable in 2023 compared to 2022.

Looking back further, we notice that the DSO was notably higher in 2021 at 75.06 days, signaling a delay in collecting payments from customers compared to the preceding year when the DSO was 64.95 days. However, there was an improvement in 2020 with the DSO decreasing to 64.95 days from the higher level in 2019, which stood at 60.91 days.

The fluctuation in Baxter's DSO suggests varying efficiency levels in managing accounts receivable over the years. It is essential for the company to monitor and potentially improve its collection processes to ensure timely receipt of payments from customers and optimize its working capital management.