What debtor days means

Debtor days — also called Days Sales Outstanding (DSO), or receivable days — is the inventory-days-shaped question, applied to the other end of a sale: once a company sells something on credit, how many days does it take, on average, to actually collect the cash from the customer?

Trade receivables — money owed to the company by customers who haven’t paid yet — sit on the balance sheet as an asset, but they’re not cash. Debtor days measures how long that gap between “sold it” and “got paid for it” usually lasts.

The formula

Debtor Days = Trade Receivables / Revenue × 365

One small wrinkle: receivables include the GST (goods and services tax) billed to customers, while revenue excludes it — so debtor days computed this way run slightly high.

Worked example: Desi Bites Foods, FY25

  ₹ Lakh
Trade receivables (FY25 closing) 199
Revenue (FY25) 2,592
Debtor Days 28 days

Worked example: Britannia Industries, FY25

From Britannia Industries’ audited consolidated FY25 results (year ended 31 March 2025, filed 8 May 2025). For illustration only.

  ₹ Crore
Trade receivables (FY25 closing) 448.61
Revenue (FY25) 17,942.67
Debtor Days 9.1 days

That’s a striking number: Britannia collects from its customers in under 10 days, versus Desi Bites’ 28 days. A large, established FMCG company selling mostly through a wide distributor network on tight credit terms can collect cash fast, and a number this low is consistent with real bargaining power over that network — though the ratio alone can’t prove it. Surfacing that kind of gap is exactly what this ratio is for.

Common mistakes

  • Treating rising debtor days as automatically a red flag, or falling debtor days as automatically good. Rising debtor days can mean weakening collections — or it can mean the company deliberately extended credit terms to win a large new customer. Context matters.
  • Comparing across business models. A company selling mostly to consumers (near-zero receivables, cash or instant digital payment) and one selling mostly to other businesses on 30–90 day credit terms will show very different debtor days for reasons that have nothing to do with quality of management.
  • Not checking for bad debt provisions. Under Indian accounting rules (Ind AS), reported receivables are shown after deducting an allowance for amounts the company already expects not to collect. So check the note for the size of that allowance and its trend — a fast-growing allowance can flatter debtor days while signalling collection trouble.
  • Watching debtor days in isolation from revenue growth. A company that grows revenue partly by loosening credit terms to customers who might not pay is buying growth with future collection risk — debtor days rising alongside a revenue growth spurt is worth a second look.

Takeaway: debtor days measures how long a company’s cash stays tied up in unpaid customer invoices — a very low number, like Britannia’s here, is often consistent with bargaining power over the sales channel, not just good bookkeeping.