If a firm sells on terms of 2/10 net 30 days, and its DSO is 28 days, then the fact that the 28-day DSO is less than the 30-day credit period tells us that the credit department is functioning efficiently and there are no past-due accounts.

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Quizplus · Accepted Answer

A DSO of 28 days, while within the 30-day credit period, does not necessarily indicate the absence of past-due accounts or that the credit department is functioning efficiently. It simply means that, on average, it takes 28 days to collect on sales. Some accounts could still be paying earlier, and others could be past due, affecting the average.

If a Firm Sells on Terms of 2/10 Net 30