Automatic Data Processing Inc (ADP)

Cash conversion cycle

		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
Cash conversion cycle	days	62.68	1,267.34	64.57	952.85	58.46	61.90	64.97	956.22	1,440.72	1,720.58	1,388.51	1,444.24	1,110.45	1,452.77	1,398.31	1,247.59	1,210.99	1,403.24	1,682.45	1,018.14

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 65.16 – 2.48
= 62.68

The cash conversion cycle of Automatic Data Processing Inc has shown significant fluctuations over the past few years. The cash conversion cycle, which measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has varied widely, ranging from as low as 58.46 days to as high as 1,720.58 days.

In the most recent period, as of June 30, 2024, the cash conversion cycle stood at 62.68 days, indicating that the company is relatively efficient in managing its working capital. However, this contrasts sharply with the cycle reported as of March 31, 2024, which was unusually high at 1,267.34 days, suggesting potential issues in managing inventory, payables, and receivables during that period.

Overall, the historical trend of the cash conversion cycle for Automatic Data Processing Inc reveals inconsistency and volatility, which could be reflective of evolving business operations, changes in management practices, or shifts in the industry environment. Further analysis would be required to determine the underlying drivers of these fluctuations and assess the company's overall efficiency in managing its operating cycle and cash flow conversion.