Automatic Data Processing Inc (ADP)

Payables turnover

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Cost of revenue	US$ in thousands	10,108,700	9,612,000	9,206,700	8,767,700	8,031,400
Payables	US$ in thousands	169,100	100,600	96,800	110,200	141,100
Payables turnover		59.78	95.55	95.11	79.56	56.92

June 30, 2025 calculation

Payables turnover = Cost of revenue ÷ Payables
= $10,108,700K ÷ $169,100K
= 59.78

The payables turnover ratios for Automatic Data Processing Inc. over the specified period indicate notable fluctuations, reflecting changes in the company's management of its trade payables relative to its cost of goods sold or operating expenses.

As of June 30, 2021, the ratio stood at 56.92, signifying that the company paid off its accounts payable approximately 57 times during the fiscal year. This ratio increased significantly in the subsequent year, reaching 79.56 as of June 30, 2022, indicating an improvement in payables efficiency or a shorter duration to settle obligations. The upward trend continued in 2023, with the ratio reaching 95.11, which suggests a further acceleration in the company's payment cycle or a reduction in payable balances relative to expenses.

The ratio remained relatively stable between 2023 and 2024, with a slight increase to 95.55, highlighting consistency in payables management during this period. However, by June 30, 2025, the ratio decreased substantially to 59.78, reflecting a decline in payables turnover efficiency. This reduction could indicate extended payment periods, possibly due to strategic supplier negotiations, cash flow considerations, or shifts in the company's procurement policies.

Overall, the trend from 2021 to 2024 demonstrates a period of increasing payables turnover, suggesting improved efficiency or shorter credit terms. The subsequent decrease in 2025 indicates a potential shift toward longer payment cycles, which may have implications for the company's liquidity and supplier relationships.