DAC as an upgrade

As standard as RCA interconnects; the standard for digital signals (okay, one of them but always a safe bet) is the 75 ohm, spdif connector. (looks like an rca female, but there is only one, usually labeled "digital out"). Rule of thumb is that its a better sound than the optincal "toslink" (tolink looks like a small plastic box, sometimes has a plug in it and transmits light (looks red if you peak in the small box). You connect the dac with a 75 ohm digital cable, not a regular interconnect. The premise is than in your denon, the denon reads the CD (transport section) and than converts from digital to analogue (DAC section), which is outputted through the RCA outputs (left and right). The DAC bypasses the digital to analogue conversion in the Denon to an outboard (hopefully better) converter. It will all work. DACs go by costs and individual preference of sound, techology (upsampling) but most attributed to the quality/make of the chip used in the dac.

Cerrot,

Thanks for the explanation. Very helpful.

So my next question is what are some good upsampling DACs out there these days to consider as an upgrade to whats on-board the Denon and what do they sound like, if possible to explain?

Mapman - Many DACs these days have built in jitter reduction circuitry allowing to use anything as a transport. I use Benchmark DAC1 with sony DVD player using 75 Ohm coax. Toslink connects my TV to Benchmark and I have still have one more unused digital input left. Since Benchmark has volume control I have it connected directly to power amp. This arrangement allows me not only to listen to TV but also to DVD, play MP3 (inherent in DVD players) and eliminate preamp+ICs. If you decide to built your own coax use quality cable like Canare, keep distance to minimum and obtain 75Ohm RCA connector (standard are not). Most likely you will have RCA on one side and BNC on another.
Check also Bel Canto DACs - warmer presentation (not to my taste).

Audition the DAC(s) in your system before you purchase. You may be surprised at how little difference you hear. I don't know how old your Denon is, but many of today's CD players utilize excellent DACs. Do use a 75 Ohm digital coax cable (Stereovox XV2 is very good for the money). I would recommend including the PS Audio DL3 on your short list.

Mapman, what is your budget?