Extreme Networks Inc (EXTR)

Days of sales outstanding (DSO)

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Receivables turnover		12.49	7.12	6.00	6.31	7.54
DSO	days	29.23	51.27	60.87	57.87	48.40

June 30, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 12.49
= 29.23

The days of sales outstanding (DSO) is a key ratio used to measure how long it takes for a company to collect its accounts receivable. Extreme Networks Inc has shown a decreasing trend in DSO over the past five years, indicating an improvement in the company's ability to collect payments from its customers more efficiently.

In particular, the DSO decreased from 48.40 days in 2020 to 29.23 days in 2024. This significant reduction suggests that Extreme Networks Inc has been more effective in managing its accounts receivable and converting sales into cash in a shorter time frame. A lower DSO implies that the company is collecting payments faster, which can improve its cash flow and liquidity position.

The decreasing DSO trend is a positive signal for investors, as it indicates that Extreme Networks Inc has been strengthening its credit and collection policies, enhancing customer relationships, and potentially reducing the risk of bad debts. However, it is essential to continue monitoring the DSO ratio to ensure that the improvement is sustained over time and that collection efforts remain efficient.