Paycom Soft (PAYC)

Working capital turnover

		Dec 31, 2024	Sep 30, 2024	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
Revenue (ttm)	US$ in thousands	1,883,127	1,823,922	1,778,291	1,741,918	1,693,674	1,629,687	1,557,551	1,473,336	1,375,218	1,289,596	1,211,623	1,136,845	1,055,524	991,485	931,823	871,264	841,434	813,896	792,370	780,096
Total current assets	US$ in thousands	4,304,800	1,977,900	2,717,590	3,171,930	2,813,430	2,562,970	2,708,190	3,054,690	2,764,170	2,228,360	3,847,990	4,434,300	2,252,040	3,313,180	2,356,520	2,624,210	1,864,600	1,778,320	1,240,060	1,651,560
Total current liabilities	US$ in thousands	3,906,800	1,659,680	2,526,880	2,942,310	2,534,640	2,069,910	2,186,730	2,565,100	2,377,040	1,897,760	3,568,470	4,112,530	1,990,410	3,086,270	2,145,210	2,425,570	1,718,030	1,627,800	1,117,250	1,497,920
Working capital turnover		4.73	5.73	9.32	7.59	6.08	3.31	2.99	3.01	3.55	3.90	4.33	3.53	4.03	4.37	4.41	4.39	5.74	5.41	6.45	5.08

December 31, 2024 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $1,883,127K ÷ ($4,304,800K – $3,906,800K)
= 4.73

The working capital turnover ratio of Paycom Soft has fluctuated over the periods analyzed. Starting at 5.08 in March 2020, the ratio improved to 6.45 in June 2020, indicating that the company was able to generate more revenue per dollar of working capital during that period. Subsequently, the ratio dipped to 4.39 in March 2021 before gradually increasing to 4.33 in June 2022.

However, a notable decline in performance was observed in the recent periods, with the working capital turnover ratio decreasing to 3.01 in March 2023 and further dropping to 2.99 in June 2023. This downward trend continued until December 2023, where the ratio unexpectedly spiked to 6.08, suggesting a sudden improvement in efficiency in utilizing working capital to drive sales.

The ratio continued to rise significantly to 9.32 in June 2024, indicating that Paycom Soft was able to generate substantially higher sales relative to its working capital during that period. Despite the subsequent decrease to 4.73 by December 2024, the ratio remains relatively healthy.

Overall, fluctuations in the working capital turnover ratio of Paycom Soft indicate varying levels of efficiency in utilizing working capital to generate revenue. The recent substantial improvements in the ratio signal positive developments in operational efficiency, although it is essential for the company to ensure consistent performance in managing working capital for sustained financial health.