Automatic Data Processing Inc (ADP)

Days of sales outstanding (DSO)

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Receivables turnover		5.60	5.98	5.20	5.50	5.98
DSO	days	65.16	60.99	70.14	66.34	61.08

June 30, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 5.60
= 65.16

Automatic Data Processing Inc's days of sales outstanding (DSO) has shown some fluctuations over the past five years. The DSO was 65.16 days as of June 30, 2024, compared to 60.99 days in the previous year. This indicates that the company took slightly longer to collect its accounts receivable in the current period.

Looking back at the trend over the five-year period, there have been variations in DSO figures, with a high of 70.14 days in 2022 and a low of 61.08 days in 2020. These fluctuations suggest potential changes in the company's credit policies, collection procedures, or customer payment behavior.

It is essential for the company to effectively manage its DSO to ensure a healthy cash flow and minimize the risk of bad debts. A higher DSO may indicate inefficiencies in accounts receivable management, while a lower DSO could imply aggressive credit policies that may lead to increased credit risk.

Overall, monitoring and analyzing DSO trends can provide insights into Automatic Data Processing Inc's effectiveness in managing its accounts receivable and cash flow.