Automatic Data Processing Inc (ADP)

Working capital turnover

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Revenue	US$ in thousands	19,202,600	18,012,200	16,498,300	15,005,400	14,589,800
Total current assets	US$ in thousands	45,542,500	42,170,600	54,804,900	40,741,800	31,564,100
Total current liabilities	US$ in thousands	45,080,000	42,767,600	55,158,700	38,094,800	30,126,600
Working capital turnover		41.52	—	—	5.67	10.15

June 30, 2024 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $19,202,600K ÷ ($45,542,500K – $45,080,000K)
= 41.52

The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate sales revenue. For Automatic Data Processing Inc, the working capital turnover ratio has shown some fluctuations over the past five years. In 2020, the ratio was at 10.15, indicating that the company generated $10.15 in sales revenue for every $1 of working capital invested.

However, in 2021, the ratio decreased to 5.67, reflecting a decrease in the efficiency of working capital utilization. This could mean that the company was not generating as much revenue with its working capital compared to the previous year.

In 2024, the working capital turnover ratio significantly increased to 41.52, signaling a notable improvement in efficiency. This suggests that Automatic Data Processing Inc was able to generate significantly more sales revenue for every $1 of working capital invested, demonstrating improved working capital management and operational efficiency.

It is important to note that the absence of data for 2023 and 2022 makes it challenging to analyze the trend in the working capital turnover ratio consistently over the past five years. Overall, the significant increase in the ratio in 2024 compared to the previous available data points indicates a positive turnaround in the company's working capital efficiency.