Paychex Inc (PAYX)
Cash conversion cycle
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | 929.63 | — | — | 1,386.13 | 1,378.05 | 1,059.25 | — | — | — | — | — | 1,128.86 | 1,095.20 | 1,101.09 | 1,252.87 | 1,012.06 | 972.88 |
| Days of sales outstanding (DSO) | days | 129.38 | 125.16 | 127.75 | 117.04 | 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 |
| Number of days of payables | days | 30.76 | 28.47 | 21.50 | 19.70 | 25.73 | 23.28 | 22.96 | 23.79 | 21.28 | 30.98 | 22.25 | 22.16 | 28.45 | 30.99 | 24.34 | 22.59 | 25.55 | 21.63 | 20.41 | 17.92 |
| Cash conversion cycle | days | 98.63 | 96.69 | 106.25 | 1,026.97 | 86.66 | 95.90 | 1,480.06 | 1,467.24 | 1,141.94 | 73.95 | 83.20 | 83.70 | 75.89 | 66.80 | 1,220.07 | 1,166.69 | 1,170.33 | 1,333.62 | 1,082.75 | 1,033.44 |
May 31, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 129.38 – 30.76
= 98.63
The data indicates significant fluctuations in Paychex Inc.'s cash conversion cycle (CCC) over the observed period. Initially, the CCC was notably high, with values exceeding 1,000 days from August 2020 through August 2021, peaking at approximately 1,467 days on August 31, 2023. During this period, the company experienced extended durations in converting investments in inventory and receivables into cash, which could suggest inefficiencies in working capital management or changes in operational cycles.
Starting from the November 2022 measurement, there is a marked reduction in the CCC to approximately 83 days, signaling an improvement in liquidity management or operational efficiency. This downward trend continues through the first half of 2024, reaching around 96.69 days in February 2025. The significant decrease reflects shorter periods for collecting receivables, managing inventories, or both.
Despite the initial high fluctuations, the later data points suggest that Paychex Inc. has achieved more stable and efficient cash management practices in recent periods, characterized by a considerably shorter CCC compared to the earlier years. This pattern indicates a transition from prolonged cycles to a more optimized working capital cycle, which could positively impact the company's liquidity position and operational flexibility.