Simulations Plus Inc (SLP)

Days of sales outstanding (DSO)

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Receivables turnover		5.84	3.91	4.72	5.60	6.76
DSO	days	62.50	93.35	77.38	65.14	54.01

August 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 5.84
= 62.50

To analyze Simulations Plus Inc.'s days of sales outstanding (DSO), we can observe a fluctuating trend over the past five years.

The DSO measures the average number of days it takes for a company to collect payment after a sale is made. A decreasing DSO is generally considered positive as it indicates that the company is collecting payments more quickly, while an increasing DSO may suggest potential issues with collections and cash flow.

In 2019, the DSO stood at 54.01 days, indicating the company was efficient in collecting payments. However, in the following year, the DSO increased to 65.14 days, suggesting a slower collection process. This trend continued in 2021, with the DSO further increasing to 77.38 days.

In 2022, there was a significant spike in the DSO to 93.35 days, signaling a notable delay in collecting payments from customers. Nevertheless, in 2023, the DSO decreased to 62.50 days, although still higher than previous years' levels.

The fluctuating DSO trend may raise concerns about the company's ability to efficiently manage its accounts receivable and collect payments in a timely manner. It's essential for Simulations Plus Inc. to closely monitor and address any underlying issues impacting its collection processes to ensure healthy cash flow and overall financial health.