Paychex Inc (PAYX)

Working capital turnover

May 31, 2025 Feb 28, 2025 Nov 30, 2024 Aug 31, 2024 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
Revenue (ttm) US$ in thousands 5,571,700 5,439,500 5,369,800 5,310,800 5,278,300 5,212,800 5,154,500 5,086,900 5,007,100 4,921,800 4,816,800 4,735,000 4,611,700 4,496,600 4,332,300 4,207,500 4,056,800 3,942,700 3,973,700 3,980,700
Total current assets US$ in thousands 8,916,500 8,077,000 7,429,600 7,361,400 7,251,500 9,886,400 8,923,700 9,088,500 7,528,100 7,595,200 6,198,200 6,085,400 6,581,600 7,237,300 6,632,400 6,317,300 6,169,500 6,622,200 5,592,400 5,340,200
Total current liabilities US$ in thousands 6,956,300 5,799,700 5,329,200 5,343,900 5,309,100 8,000,800 7,254,400 7,343,500 5,805,400 5,958,100 4,753,900 4,702,200 5,269,200 5,687,900 5,221,900 4,957,900 4,938,200 5,356,000 4,380,000 4,263,100
Working capital turnover 2.84 2.39 2.56 2.63 2.72 2.76 3.09 2.92 2.91 3.01 3.34 3.42 3.51 2.90 3.07 3.10 3.29 3.11 3.28 3.70

May 31, 2025 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $5,571,700K ÷ ($8,916,500K – $6,956,300K)
= 2.84

The working capital turnover ratio for Paychex Inc. exhibits notable fluctuations over the period from August 2020 to May 2025, reflecting changes in the company's efficiency in utilizing its working capital to generate sales.

Initially, during August 2020, the ratio stood at 3.70, indicating that the company generated sales equivalent to approximately 3.7 times its working capital. Subsequently, the ratio experienced a decline through the subsequent periods, reaching a low of 2.76 in February 2024. This downward trend suggests a diminishing efficiency in working capital utilization, which may be attributable to factors such as increased working capital levels, decreased sales relative to working capital, or operational adjustments.

In specific periods, such as May 2022 and August 2022, the ratio rose to 3.51 and 3.42 respectively, indicating improved efficiency during these intervals. Conversely, the ratio consistently declined again thereafter, reaching its minimum at 2.39 in February 2025, which signals a period of substantially reduced working capital turnover efficiency.

A modest recovery is observed in the most recent data point from May 2025, with the ratio increasing slightly to 2.84. Despite this uptick, the ratio remains below the initial levels observed in August 2020, illustrating a trend of overall decreasing efficiency in managing working capital relative to sales over the analyzed period.

This pattern indicates that while Paychex Inc. experienced periods of improved working capital utilization, the general trend over the assessed timeframe points toward reduced efficiency in converting working capital into sales. Such changes could reflect operational adjustments, shifts in sales volume, or alterations in working capital management strategies.