Paychex Inc (PAYX)

Short-term

Turnover ratios

Paychex Inc's inventory turnover ratio has shown some fluctuation over the past few periods, ranging from 0.26 to 0.37. This indicates that the company is managing its inventory efficiently on average, although there may have been some challenges in managing inventory levels effectively.

The receivables turnover ratio has generally been stable, averaging around 3.5 to 4.5 times per year. This suggests that Paychex Inc is collecting its accounts receivable in a timely manner. The slight increase in the ratio over time indicates an improvement in the efficiency of credit and collection policies.

On the other hand, the payables turnover ratio has exhibited more variability, ranging from 11.78 to 20.36. A higher payables turnover ratio implies that the company is taking longer to pay its suppliers, which can be advantageous as it indicates better cash flow management. However, the significant fluctuations in this ratio may warrant further investigation into the company's payment practices.

The working capital turnover ratio has generally remained stable and relatively high, indicating that Paychex Inc is effectively utilizing its working capital to generate sales. A higher ratio implies that the company is efficient in utilizing its current assets to support sales growth.

Overall, Paychex Inc's activity ratios suggest that the company is effectively managing its inventory, accounts receivable, accounts payable, and working capital to support its operations and generate sales. However, the fluctuations in some of these ratios may require closer monitoring to ensure continued efficiency in managing these key components of the business.

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Average number of days

The activity ratios of Paychex Inc based on the provided data show fluctuations over the periods analyzed:

Days of Inventory on Hand (DOH):
- The Days of Inventory on Hand ranged from 972.88 days to 1,386.13 days over the last few periods.
- There were instances of high inventory holding periods, indicating slower inventory turnover. The company may have faced challenges in managing and selling its inventory efficiently during these times.

Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding varied from 71.39 days to 119.18 days across the periods examined.
- Lower DSO values suggest faster collection of receivables, which is a positive indication of efficient credit management. However, higher values could signify delayed customer payments or potential credit risks.

Number of Days of Payables:
- The Number of Days of Payables ranged from 17.92 days to 30.99 days during the observed periods.
- Fluctuations in payables days may reflect changes in the company's payment terms with suppliers. Longer payable periods may indicate better cash flow management but could also signal potential strained supplier relationships.

Overall, it is essential for Paychex Inc to maintain a balance between managing inventory efficiently, collecting receivables promptly, and effectively managing payables to optimize working capital and sustain healthy operational performance.

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Long-term

Paychex Inc's fixed asset turnover ratio has been relatively stable over the past few periods, ranging between 10.25 to 12.82. This indicates that the company generates revenue efficiently from its investment in fixed assets such as property, plant, and equipment. A higher fixed asset turnover ratio suggests better asset utilization.

On the other hand, the total asset turnover ratio has shown more variability, ranging from 0.40 to 0.52. This ratio indicates how effectively the company utilizes all its assets to generate revenue. Paychex Inc's total asset turnover ratio has generally been lower than its fixed asset turnover ratio, which suggests that its fixed assets are more efficiently utilized compared to its total assets.

Overall, while Paychex Inc shows efficient use of fixed assets in generating revenue, there may be opportunities for the company to improve the utilization of its total assets to enhance overall efficiency in generating sales.