Which KPI measures the efficiency of cash flow management?Review LaterEarnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)Days Sales Outstanding (DSO)Gross Profit MarginReturn on Investment (ROI)
Question
Which KPI measures the efficiency of cash flow management?Review LaterEarnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)Days Sales Outstanding (DSO)Gross Profit MarginReturn on Investment (ROI)
Solution
The KPI that measures the efficiency of cash flow management is Days Sales Outstanding (DSO). This KPI indicates the average number of days that a company takes to collect revenue after a sales transaction has been made. A low DSO number means that it takes a company fewer days to collect its accounts receivable. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect money.
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