Automatic Data Processing Inc (ADP)

Activity ratios

Short-term

Turnover ratios

	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Inventory turnover	—	0.30	—	0.41	—	—	—	0.41	0.27	0.22	0.27	0.26	0.35	0.26	0.27	0.31	0.32	0.27	0.22	0.38
Receivables turnover	5.60	5.43	5.49	5.90	5.98	5.71	5.43	5.73	5.20	4.95	5.73	5.54	5.50	5.29	5.81	5.85	5.98	5.61	5.59	5.74
Payables turnover	146.96	171.99	187.45	210.88	144.68	185.45	159.82	162.47	119.52	157.99	121.88	159.05	86.13	97.28	88.19	82.64	82.80	72.55	61.95	74.80
Working capital turnover	41.52	25.50	41.52	—	—	—	—	—	—	20.17	7.75	6.46	5.67	6.84	5.86	5.86	10.15	14.18	17.18	46.47

Automatic Data Processing Inc's inventory turnover has been inconsistent over the past few quarters, ranging from 0.22 to 0.41 times. This suggests variability in how efficiently the company is managing its inventory levels.

The receivables turnover ratio has been relatively stable, fluctuating between 4.95 and 5.98 times. This indicates that the company is collecting its accounts receivable at a fairly consistent pace.

On the other hand, the payables turnover ratio has shown significant fluctuations, ranging from 61.95 to 210.88 times. This could indicate changes in the company's payment terms with suppliers.

The working capital turnover has also varied widely, with values ranging from 5.67 to 41.52 times. This suggests that the company's ability to use its working capital efficiently has been inconsistent.

Overall, while the receivables turnover ratio shows stability, the inventory turnover, payables turnover, and working capital turnover ratios exhibit fluctuations, indicating potential areas for improvement in managing the company's operating cycle.

Average number of days

		Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Days of inventory on hand (DOH)	days	—	1,202.31	—	892.74	—	—	—	894.79	1,373.64	1,649.13	1,327.82	1,380.70	1,048.36	1,387.47	1,339.60	1,189.63	1,154.32	1,343.17	1,623.08	959.43
Days of sales outstanding (DSO)	days	65.16	67.16	66.51	61.84	60.99	63.87	67.25	63.68	70.14	73.76	63.69	65.84	66.33	69.05	62.84	62.38	61.08	65.10	65.27	63.59
Number of days of payables	days	2.48	2.12	1.95	1.73	2.52	1.97	2.28	2.25	3.05	2.31	2.99	2.29	4.24	3.75	4.14	4.42	4.41	5.03	5.89	4.88

The Days of Inventory on Hand (DOH) ratio measures the average number of days it takes for a company to sell its inventory. A higher DOH indicates slower inventory turnover, which can potentially tie up capital and increase storage costs. The trend for Automatic Data Processing Inc's DOH ratio has been fluctuating significantly over the periods analyzed, ranging from as low as 892.74 days to as high as 1,649.13 days. This indicates inconsistency in managing inventory levels efficiently.

The Days of Sales Outstanding (DSO) ratio indicates the average number of days it takes for a company to collect its accounts receivable. A higher DSO suggests slower collection of receivables, which may impact cash flow and liquidity. Automatic Data Processing Inc's DSO ratio has also varied over time, with values ranging from 60.99 days to 73.76 days. This indicates possible fluctuations in the company's credit and collection policies.

The Number of Days of Payables ratio measures the average number of days a company takes to pay its suppliers. A lower number of days typically indicates a more favorable position for the company as it can retain cash for a longer period. Automatic Data Processing Inc's payables days have shown some stability, with values ranging from 1.73 days to 5.89 days. A lower value in this ratio suggests the company is efficiently managing its payables, potentially benefiting from better credit terms or discounts from suppliers.

Overall, Automatic Data Processing Inc's activity ratios indicate mixed performance in managing its inventory, collecting receivables, and paying suppliers efficiently. Further analysis and comparison with industry benchmarks would provide more insights into the company's operational effectiveness and potential areas for improvement.

Long-term

	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Fixed asset turnover	28.01	27.80	27.58	27.66	26.43	26.46	26.20	26.12	25.28	24.73	24.33	23.67	21.93	20.84	21.04	20.76	20.73	19.77	19.01	18.64
Total asset turnover	0.35	0.29	0.32	0.37	0.35	0.29	0.32	0.36	0.26	0.22	0.27	0.26	0.31	0.27	0.30	0.34	0.37	0.34	0.30	0.38

The fixed asset turnover ratio for Automatic Data Processing Inc has generally been increasing over the historical period, indicating that the company is generating more revenue relative to its investment in fixed assets. This suggests improved efficiency in the utilization of fixed assets to generate sales.

On the other hand, the total asset turnover ratio has varied over the period but generally demonstrates fluctuations in the company's ability to generate sales relative to its total assets. The ratio reached its peak in some quarters but also experienced declines in others.

Overall, the trends in both fixed asset turnover and total asset turnover ratios suggest that Automatic Data Processing Inc has been effectively managing its assets to drive sales and generate revenue. However, it may be important to further investigate the fluctuations in the total asset turnover ratio to understand the company's overall asset utilization efficiency.