Paychex Inc (PAYX)
Days of sales outstanding (DSO)
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 3.25 | 3.51 | 3.50 | 3.85 | 5.11 | |
| DSO | days | 112.39 | 103.96 | 104.33 | 94.79 | 71.39 |
May 31, 2024 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 3.25
= 112.39
The days of sales outstanding (DSO) ratio for Paychex Inc has shown an increasing trend over the past 5 years, indicating a potential weakening in the company's accounts receivable management efficiency.
In May 2020, the DSO stood at 71.39 days, which was the lowest in the period under consideration. However, there has been a consistent increase in DSO since then, with the ratio reaching 94.79 days in May 2021, 104.33 days in May 2022, 103.96 days in May 2023, and 112.39 days in May 2024.
This upward trend in DSO suggests that it is taking Paychex Inc longer to collect payments from its customers, which may have implications for the company's cash flow and working capital management. It is important for the company to monitor and analyze the reasons behind this increase in DSO and take necessary steps to improve its accounts receivable collection process to ensure financial stability and efficiency.