Automatic Data Processing Inc (ADP)

Working capital turnover

		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
Revenue (ttm)	US$ in thousands	19,202,800	18,808,000	18,506,700	18,268,100	18,012,100	17,556,800	17,162,500	16,847,400	16,499,700	16,085,300	15,679,100	15,353,500	15,009,000	14,617,400	14,577,100	14,564,800	14,589,800	14,692,300	14,472,700	14,295,600
Total current assets	US$ in thousands	45,542,500	55,639,600	48,543,400	40,480,100	42,170,600	51,518,200	46,143,600	37,968,800	54,804,900	63,903,800	51,107,300	52,047,900	40,741,800	46,752,400	41,662,300	34,815,400	31,564,100	35,708,700	41,365,000	29,508,500
Total current liabilities	US$ in thousands	45,080,000	54,901,900	48,097,700	41,228,700	42,767,600	51,536,100	46,813,700	39,166,200	55,158,700	63,106,500	49,084,000	49,669,900	38,094,800	44,615,200	39,176,500	32,329,600	30,126,600	34,672,800	40,522,400	29,200,900
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

June 30, 2024 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $19,202,800K ÷ ($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. A higher ratio indicates better efficiency in managing working capital.

Looking at the data provided for Automatic Data Processing Inc, we can see fluctuations in the working capital turnover ratio over the periods mentioned. The highest ratio was 46.47 in Sep 2019, indicating a peak in the efficiency of utilizing working capital to generate revenue.

There seems to be a significant drop in the ratio in the subsequent periods, with a notable decrease to 5.67 in Mar 2022. This suggests a potential inefficiency in utilizing working capital during that period.

The ratio shows signs of improvement in the more recent periods, with a notable increase to 25.50 in Mar 2024 and 41.52 in Jun 2024, which indicates a positive trend in utilizing working capital efficiently to drive sales revenue.

Overall, the trend in the working capital turnover ratio for Automatic Data Processing Inc shows variability over time, with periods of lower efficiency in utilizing working capital followed by improvements in recent periods. It is important for the company to continue monitoring and managing its working capital effectively to sustain or improve its operational efficiency and financial performance.