Paycom Soft (PAYC)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	1.83	2.76	2.55	3.40	3.85
Days of sales outstanding (DSO)	days	7.52	7.55	8.97	8.51	6.61
Number of days of payables	days	18.33	27.54	13.01	20.05	16.80
Cash conversion cycle	days	-8.98	-17.24	-1.50	-8.14	-6.34

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 1.83 + 7.52 – 18.33
= -8.98

The cash conversion cycle of Paycom Software Inc has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle improved significantly to -12.88 days, representing a more efficient management of working capital compared to the previous year. This indicates that the company is able to convert its inventory and receivables into cash more quickly while managing its payables effectively.

In 2022, the cash conversion cycle was -23.51 days, which was a substantial deterioration from the previous year. This suggests that the company took longer to convert its investments in inventory and receivables into cash, impacting its overall liquidity position.

In 2021, the cash conversion cycle improved to -4.03 days, indicating a more efficient working capital management compared to the prior year. This improvement may have been driven by faster inventory turnover or quicker collection of receivables.

In 2020, the company saw a decrease in its cash conversion cycle to -12.55 days, suggesting better management of working capital compared to the previous year. This improvement could reflect more effective inventory and receivables management practices.

In 2019, the cash conversion cycle was -9.32 days, demonstrating efficient working capital management. This indicates that the company was able to convert its investments in inventory and receivables into cash quickly, positively impacting its overall liquidity position.

Overall, Paycom Software Inc has generally exhibited efficient working capital management over the past five years, with fluctuations in the cash conversion cycle reflecting changes in the company's ability to convert its operating cycle into cash effectively.