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re: Cost of DSO
Posted on 3/2/11 at 7:27 pm to sneakytiger
Posted on 3/2/11 at 7:27 pm to sneakytiger
quote:
Is your DSO being calculated using average AR over the two year contract period?
Yes - I'm calculating a historical DSO in order project a future cost of DSO. My reasoning is that if a certain client has some historical DSO they are likely to sustain that behavior in the future. If I'm about to sign a 2-year contract with that client then I want to understand what my cost to finance their DSO will be.
1
Posted on 3/2/11 at 7:34 pm to Pheeze
Yeah I think your formula is right then... only other comment is would you need to include some sort of discount factor for the year 2 cash flows? 
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