Worthington Industries Inc (WOR)
Days of sales outstanding (DSO)
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 7.05 | 5.97 | 4.94 | 8.76 | 7.33 | |
| DSO | days | 51.75 | 61.14 | 73.88 | 41.69 | 49.79 |
May 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 7.05
= 51.75
Based on the data provided, Worthington Enterprises Inc.'s days of sales outstanding (DSO) have fluctuated over the past five years. The DSO measures the average number of days it takes for the company to collect its accounts receivable, indicating the efficiency of its credit and collection policies.
In 2023, the DSO decreased to 51.75 days from 61.14 days in 2022. This indicates that the company improved its collection process, requiring fewer days to convert its sales into cash. The decline in DSO suggests more efficient management of accounts receivable and could reflect stricter credit policies or more proactive collection efforts in the most recent year.
Furthermore, comparing the DSO to the earlier years reveals variability in the collection period. In 2021, the DSO was 73.88 days, significantly higher than in 2023, indicating a longer collection period and a potential risk of bad debts or delayed cash inflows. The decrease in DSO from 2021 to 2023 reflects a positive trend toward faster collection of receivables.
It is important to note that a declining DSO generally signifies improved cash flow and liquidity, as the company is able to convert its sales into cash more quickly. However, a very low DSO could also indicate overly aggressive collection practices that may impact customer relationships. Therefore, while reducing DSO is generally positive, it should be managed in a balanced manner to avoid adverse effects on customer relationships.
Peer comparison
May 31, 2023