Paychex Inc (PAYX)
Working capital turnover
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 5,278,300 | 5,007,100 | 4,611,700 | 4,056,800 | 4,040,500 |
| Total current assets | US$ in thousands | 7,251,500 | 7,528,100 | 6,581,600 | 6,169,500 | 5,464,600 |
| Total current liabilities | US$ in thousands | 5,309,100 | 5,805,400 | 5,269,200 | 4,938,200 | 4,426,900 |
| Working capital turnover | 2.72 | 2.91 | 3.51 | 3.29 | 3.89 |
May 31, 2024 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $5,278,300K ÷ ($7,251,500K – $5,309,100K)
= 2.72
The working capital turnover ratio for Paychex Inc has exhibited a declining trend over the past five years. In 2020, the company had a working capital turnover of 3.89, which then decreased to 3.29 in 2021, further dropping to 3.51 in 2022, and 2.91 in 2023. The most recent ratio in 2024 stands at 2.72.
A working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate revenue. A higher ratio indicates that the company is generating more revenue with less working capital, reflecting better efficiency in managing its current assets and liabilities. Conversely, a decreasing trend in the ratio may suggest inefficiencies in working capital management or changes in the company's operations that affect its working capital turnover.
Overall, the declining trend in Paychex Inc's working capital turnover ratio over the years may warrant a closer look into the company's working capital management practices to identify areas of improvement and optimize the efficiency of its capital utilization.