Do you think that companies' DSOs are increasing because of this economy? The days sales outstanding (DSO) ratio (which is also known as the average collection period) is an critical ratio that should be analyzed when evaluating a company's short-term financial management policy. Generally, the lower a company's DSO is in comparison to the industry average, the better for the firm since the firm is converting sales into cash faster.If a firm has a DSO that is higher than the industry average, the firm can try to do some or all of the following to get its DSO below the industry average:(a) Lower the number of individuals or businesses with a poor financial condition that it extends credit to;(c) Charge customers a late penalty fee.(c) Consider a 2/10 net 30 payment plan to encourage early payments.