Paycom Soft (PAYC)

Days of inventory on hand (DOH)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover		199.78	132.38	143.14	107.34	94.77
DOH	days	1.83	2.76	2.55	3.40	3.85

December 31, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 199.78
= 1.83

The Days of Inventory on Hand (DOH) is a liquidity ratio that measures the average number of days a company holds its inventory before it is sold. A lower DOH indicates a faster turnover of inventory, which is generally more desirable as it suggests efficient inventory management.

Analyzing the data provided for Paycom Software Inc, we observe a decreasing trend in the DOH over the past five years. In 2019, the company had a DOH of 4.73 days, which gradually decreased to 2.26 days by the end of 2023. This decline indicates that Paycom Software Inc has been able to improve its inventory turnover efficiency over the years.

The decreasing trend in DOH suggests that the company has been managing its inventory more effectively, potentially reducing carrying costs and the risk of obsolete inventory. A lower DOH also implies that the company is able to convert its inventory into sales more quickly, which can positively impact cash flow and profitability.

Overall, the trend in Paycom Software Inc's Days of Inventory on Hand ratio indicates improvements in inventory management efficiency over the years, which is a positive indicator for the company's operations and financial performance.