Paychex Inc (PAYX)
Days of sales outstanding (DSO)
| May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Receivables turnover | 3.25 | 3.06 | 3.12 | 3.23 | 3.51 | 3.48 | 3.46 | 3.45 | 3.50 | 3.73 | 3.16 | 3.88 | 3.85 | 3.57 | 4.01 | 4.65 | 5.11 | 4.85 | 4.45 | 4.53 | |
| DSO | days | 112.39 | 119.18 | 116.90 | 112.98 | 103.96 | 104.94 | 105.45 | 105.86 | 104.33 | 97.79 | 115.55 | 94.08 | 94.79 | 102.38 | 91.10 | 78.48 | 71.39 | 75.30 | 81.95 | 80.58 |
May 31, 2024 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 3.25
= 112.39
Days Sales Outstanding (DSO) is a crucial metric that measures the amount of time it takes for a company to collect its accounts receivable. A higher DSO indicates that the company is taking longer to collect payments from its customers, potentially impacting its cash flow.
Analyzing the DSO trend of Paychex Inc over the past few periods reveals fluctuations in the collection efficiency of the company. The DSO values have ranged from a low of 71.39 days to a high of 119.18 days.
The DSO peaked at 119.18 days in February 2024, indicating a significant delay in collecting payments from customers during that period. It is important to investigate the reasons behind this increase in DSO to identify any issues in the company's credit and collection processes.
On the other hand, the lowest DSO value of 71.39 days in August 2020 suggests that the company was more effective in collecting payments during that period. A lower DSO reflects a shorter collection period and better cash flow management.
Overall, monitoring the DSO trend of Paychex Inc can provide insights into the company's accounts receivable management and effectiveness in collecting payments from customers. It is essential for the company to strive for lower DSO values to optimize its cash flow and working capital efficiency.