Generally speaking, higher DSO ratio can indicate a customer base with credit problems and/or a company that is deficient in its collections activity.
[1] A low ratio may indicate the firm's credit policy is too rigorous, which may be hampering sales.
Because this is an average general KPI, though, choosing a time period that's too low may introduce undesirable artifacts in the data.
Days sales outstanding is considered an important tool in measuring liquidity.
Higher days sales outstanding can also be an indication of inadequate analysis of applicants for open account credit terms.
If DSO is getting longer, accounts receivable is increasing or average sales per day are decreasing.
Some companies may attempt to focus in more on the collection aspect of DSO equation by calculating days delinquent sales outstanding (DDSO).